Upcoming income tax threshold changes, what you need to know for Payroll!

July 23, 2024

The Personal Income Tax thresholds will change on 31 July 2024.  

All payroll payments paid on or after 31 July 2024 should be taxed using the new income tax rates.

TOP TIP – If you pay your employees by a pre-loaded automatic payment, remember to update these!

The threshold changes will have different effects on your payroll

If you use payroll software and they make the updates by 31 July, then you shouldn’t have to do a thing. Your software provider will let you know if you do
If you do not use payroll software, then you’ll need to ensure you start using the new tax tables when calculating PAYE.

You can find these online at:

https://www.ird.govt.nz/deductions-from-salary-and-wages

Employees can be assured that any overpaid tax will be squared up after the end of the tax year 31 March 2025.

Other impacts of the changes and more information

If your employees use a secondary tax code or tailored tax code, they may need to change it.

Please direct them to the IRD website or their myIR account.

Do I need to review and update existing KiwiSaver employer savings contribution tax (ESCT) rates?

No, the new rates will apply from 1 April 2025 for the employer savings contribution tax (ESCT).

Do the NEW tax rates apply when calculating tax for ‘Extra Pays’?

The deduction rates for calculating PAYE on an "extra pay" payment will continue to use the existing personal income tax thresholds (01 April 2024-30 July 2024), until 1 April 2025.

This is to reduce the likelihood of people receiving a tax bill at the end of the tax year.

The Tax declaration form (IR330) has been updated to reflect the new tax rates and thresholds. Here is the link to the new form: New tax declaration form

You can find more information on the personal income tax changes at:

https://www.ird.govt.nz/income-tax-changes

For any questions on these changes, please contact the Accounted4 Payroll team.