Finance Minister Steven Joyce has announced changes to personal tax thresholds that will leave all working Kiwis with more cash in their pocket.
New Zealand currency (file picture).
The Government has announced a $2 billion per year Family Incomes Package that changes the tax thresholds, Working for Families, and the Accommodation Supplement which it says will help Kiwi families get ahead.
Mr Joyce said the changes would benefit around 1.3 million families in New Zealand by, on average, $26 per week.
From April 1 2018, the new tax threshholds will be adjusted as follows:
**Increasing the $14,000 income tax threshold to $22,000, and the $48,000 tax threshold to $52,000.
Current New Zealand tax rates for personal income:
10.5% on the first $14,000 earned (rising to $22,000 from April 1, 2018)
17.5%: $14,001 ($22,001 from April 1, 2018) to $48,000 ($52,000 from April 1, 2018)
30%: $48,001 ($52,001 from April 1, 2018) to $70,000
33% from $70,001
Mr Joyce said today: "It is important that Kiwi families directly share in the benefits of New Zealand’s economic growth.
"The Family Incomes Package is carefully designed to especially assist low and middle income earners with young families and higher housing costs."
Other changes include:
*Discontinuing the Independent Earner Tax Credit.
*Increasing the Family Tax Credit rates for young children to the level of those for children aged 16 to 18, while increasing the abatement rate and decreasing the abatement threshold.
*Increasing the Accommodation Supplement maximum amounts, and updating the Accommodation Supplement areas to reflect 2016 rents.
*Increasing the weekly payments of the Accommodation Benefit for eligible Student Allowance recipients by up to $20.
Mr Joyce said that as wages had risen over the last seven years, people on lower and middle incomes had been faced with higher marginal tax rates.
"The Budget 2017 Family Incomes Package will provide better rewards for hard work by adjusting the bottom two tax thresholds and lowering the marginal tax rates for low and middle income earners," Mr Joyce said.
"At the same time it will start simplifying the tax and transfer system by removing the separate Independent Earner Tax Credit which is claimed during the year by less than one third of those eligible."