Tax Brackets NZ: Income Tax Rates for the Self-Employed (2026–27)

Short answer: New Zealand’s tax brackets are 10.5% on income up to $15,600, 17.5% from $15,601 to $53,500, 30% from $53,501 to $78,100, 33% from $78,101 to $180,000 and 39% above $180,000. These rates took effect on 1 April 2025 and are the current rates on Inland Revenue’s tax-rates page. Sole traders pay exactly the same rates as employees, but on net profit, with no PAYE taken out, so the tax is settled through your IR3 and, once your bill passes $5,000, provisional tax.

Inland Revenue names each tax year by the date it ends: the 2026 tax year is 1 April 2025 – 31 March 2026, and the 2027 tax year, the one you are trading in now, is 1 April 2026 – 31 March 2027. The bracket table below applies to the whole of both years, for sole traders with a standard 31 March balance date. For everything a sole trader owes (income tax, ACC and GST), start with self-employed taxes in NZ, and see the New Zealand guides hub for the rest of the series.

What are the NZ tax brackets for 2026–27?

There are five income tax brackets, and they are the same for every individual taxpayer, whatever the source of the income. Inland Revenue publishes them on its tax rates for individuals page (checked October 2026).

Taxable income (from 1 April 2025)	Tax rate	Tax on the whole band
$0 – $15,600	10.5%	$1,638.00
$15,601 – $53,500	17.5%	$6,632.50
$53,501 – $78,100	30%	$7,380.00
$78,101 – $180,000	33%	$33,627.00
$180,001 and over	39%	39c on every dollar above $180,000

The third column is the tax on that band alone. Add the bands below your income to get your total. Someone on $78,100 pays $1,638 + $6,632.50 + $7,380 = $15,650.50.

Do sole traders pay different tax rates in NZ?

No. There is no separate sole trader tax rate in New Zealand: a sole trader is taxed as an individual, at the brackets above, using their personal IRD number.

What is different is the base and the timing:

• You are taxed on net profit, meaning business income minus deductible expenses, not on what you invoice. GST you collect is not your income either, if you are registered. Getting expenses right is the single biggest lever on your bill, so see which expenses and receipts count.
• All your income is added together. If you have a salary, rental income or interest as well as business profit, they stack into one taxable income and move through the same five brackets.
• No one withholds tax for you. An employer deducts PAYE every payday. A sole trader receives the gross amount and settles up after the year ends on an IR3 return. If a client deducts schedular withholding tax, that is a credit against the final bill.

How do tax brackets work: marginal vs effective tax rate?

Your marginal rate is the rate on your next dollar of profit. Your effective rate is your total tax divided by your total income. Once your income passes the first bracket, the effective rate is always lower than the marginal rate, because the first slices of income are taxed at the lower rates.

Moving into a higher bracket never makes you worse off. If your profit goes from $53,000 to $54,000, only the $500 above $53,500 is taxed at 30%. The rest is untouched.

Here is the income tax on common sole-trader profit levels for the 2026 and 2027 tax years, assuming no other income and before any tax credits you may be entitled to.

Net profit	Income tax	Effective rate	Marginal rate
$30,000	$4,158.00	13.9%	17.5%
$40,000	$5,908.00	14.8%	17.5%
$60,000	$10,220.50	17.0%	30%
$90,000	$19,577.50	21.8%	33%
$120,000	$29,477.50	24.6%	33%
$200,000	$57,077.50	28.5%	39%

Take the $60,000 line: $1,638 on the first $15,600, $6,632.50 on the next $37,900, and $1,950 on the $6,500 above $53,500 at 30%. Total $10,220.50, which is 17% of your profit even though your top slice is taxed at 30%.

What is the top tax rate in NZ?

The top personal tax rate is 39%, and it applies only to the part of your taxable income above $180,000. A sole trader with $200,000 of profit pays 39% on $20,000 of it, not on all $200,000, and their effective rate is about 28.5%.

Do I use the IRD tax tables if I’m self-employed?

Usually not. The IRD tax tables people search for each year, such as the IR340 weekly and fortnightly tables and the IR341 four-weekly and monthly tables, are PAYE deduction tables for employers. They tell an employer how much to withhold from a wage. They do not apply to profit you earn as a sole trader.

They matter in one situation: you have a job and a business on the side. PAYE covers the salary, and your business profit lands on top of it, so the profit is taxed at your marginal rate from where the salary stops.

Example. You earn a $55,000 salary and make $20,000 profit from evening and weekend work. Your salary already takes you past $53,500, so the whole $20,000 sits in the 30% band. That is $6,000 of income tax on the side business, plus ACC, all payable through your IR3 because none of it was withheld. People who budget at 17.5% for side income are often caught out by exactly this.

How much tax should I set aside from each invoice?

Set aside enough to cover income tax at your expected effective rate, plus ACC, plus a margin, and keep any GST in a separate pot entirely.

A practical way to do it:

1. Estimate your profit for the year and read your effective rate off the table above.
2. Add the ACC earners’ levy. For the 2026–27 levy year it is $1.75 per $100 of liable earnings including GST, according to Inland Revenue’s ACC earners’ levy rates. Self-employed people also pay a work levy that depends on their industry; see ACC levies for the self-employed.
3. Round up. At $60,000 profit, income tax is about 17% and the earners’ levy adds 1.75%, before the work levy. Putting 22–25% of each payment aside leaves room for the work levy and a better year than you planned.
4. If you are GST registered, move the GST out first. It was never yours. Registration is compulsory once your turnover reaches $60,000 in 12 months. The GST share of a GST-inclusive payment is 3/23 of it; the NZ GST calculation guide has the formulas.

When do I pay the tax, and when does provisional tax start?

In your first year you pay the whole year’s income tax after it ends, as end-of-year (terminal) tax. For the 2026 tax year that is due 7 February 2027, or 7 April 2027 if you have a tax agent with an extension of time, according to Inland Revenue’s timelines at the end of the tax year. After that, if your residual income tax, the tax left to pay after PAYE and other credits, was more than $5,000 in your last return, you become a provisional taxpayer for the following year, according to Inland Revenue’s provisional tax page.

On the brackets above, that threshold is crossed at roughly $35,000 of profit for someone with no other income and no tax credits. Once you are in, you pay the current year’s tax in instalments during the year, as well as the previous year’s balance. Provisional tax in NZ explains the options and due dates.

Did NZ tax brackets change recently?

Yes. The thresholds were raised part-way through the 2025 tax year (1 April 2024 – 31 March 2025), which is why that one year used blended “composite” rates and Inland Revenue issued mid-year PAYE tables. From 1 April 2025, the start of the 2026 tax year, the table at the top of this page applies for the full year.

If a calculator uses thresholds other than $15,600, $53,500, $78,100 and $180,000, it is for the 2025 tax year or out of date. Brackets change only by legislation, so check Inland Revenue’s page at the start of each tax year.

Getting your profit figure right, and where does Keel fit?

The brackets are fixed; the number you apply them to is not. Your tax bill depends on your profit, and your profit depends on invoices and expenses being recorded completely through the year, not reconstructed from a bank statement in June.

Keel: Invoice Maker & Receipts, an iPhone app by Ilura Technology OÜ, is built for that record keeping. You create quotes that become invoices in one tap, send PDF invoices, capture receipts and expenses, log business mileage, and keep each piece under the job and customer it belongs to. “Who owes you” shows unpaid invoices and prepares reminder drafts that you review and send yourself; nothing goes out automatically. Everything stays on your iPhone: no account, no bank connection, no cloud sync, and the App Store privacy label reads “Data Not Collected”.

What Keel does not do: it does not calculate your New Zealand income tax, file your IR3 or connect to Inland Revenue. It keeps the records you or your accountant work from. It is free to use with no invoice limit (free invoices carry a small “Made with Keel” footer), and Keel Lifetime is a one-time purchase of $249.99 USD (the App Store shows your local price) that adds custom branding, your signature, premium templates and accountant-ready exports and reports. Keel on the App Store.

Frequently asked questions

What are the tax brackets in NZ for 2026? From 1 April 2025 the brackets are 10.5% on income up to $15,600, 17.5% from $15,601 to $53,500, 30% from $53,501 to $78,100, 33% from $78,101 to $180,000 and 39% above $180,000. They apply to the whole 2026 tax year (1 April 2025 – 31 March 2026) and are the current rates for the 2027 tax year.

Is there a different tax rate for sole traders in NZ? No. Sole traders pay the same individual income tax rates as employees, using their personal IRD number. The difference is that tax is charged on net profit after deductible business expenses, and nobody deducts PAYE for you, so you pay through your IR3 and, once your residual income tax exceeds $5,000, through provisional tax instalments.

What is the top tax rate in New Zealand? The top rate is 39%, and it only applies to the part of your taxable income above $180,000. Everything below that is taxed at the lower bracket rates, so a sole trader with $200,000 of profit pays 39% on just $20,000 of it and has an effective income tax rate of about 28.5%.

How much tax do I pay on $60,000 of self-employed income in NZ? On $60,000 of net profit with no other income, income tax is $10,220.50 for the 2026 or 2027 tax year, an effective rate of about 17%. On top of that, ACC charges levies on your liable earnings: the earners’ levy is $1.75 per $100 including GST for 2026–27, plus a work levy set by your industry classification.

Do I need the IRD tax tables if I’m self-employed? Not for your business income. The IR340 and IR341 tables are PAYE deduction tables that employers use to work out tax on wages. As a sole trader you apply the annual tax brackets to your yearly profit instead. If you also have a salaried job, PAYE covers the wage, and your business profit is taxed on top at your marginal rate.

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This article is general information, not tax advice. Consult a qualified New Zealand tax professional.