Celebrating even modest increases in income is important in today’s world…
For the first time since 2010, New Zealanders are seeing some relief on tax. The changes happened end of July 2024, and do promise to leave a little more money in your pocket.
Let’s break down the main changes:
1. Increases to Personal Income Tax threshold
The income thresholds for tax brackets have been adjusted upwards, this means more of your income will be taxed at lower rates allowing you to retain a larger portion of your earnings.
| Tax Rate | Current threshold | New threshold July 2024 |
| 10.5% | $0 – $14000 | $0 – $15,600 |
| 17.5% | $14001 – $48,000 | $15,601 – $53,500 |
| 30% | $48,001 – $70,000 | $53,501 – $78,100 |
| 33% | $70,001 – $18,0000 | $78,101 – $180,000 |
| 39% | $180,001 upwards | $180, 001 upwards |
2. Independent Earners Tax Credit (IETC)
The IETC has also seen threshold increased
| Current threshold | New threshold | Your entitlement |
| $24,000 – $44,000 | $24,000 – $66,000 | $10 a week or $520 a year |
| $44,001 – $48,000 | $66,001 – $70,000 | Payment reduces by 13c for every dollar you earn |
How you might maximize this extra cash…
Even a small increase can help cover essential expenses or reduce debt. In a tight budget, every dollar counts, and a bit of extra income can alleviate financial stress.
- Review your budget – With extra money coming in, it’s a great time to reassess your budget. Identify areas where you can save more or invest. Maybe it’s time to pay off some debt faster, build an emergency fund, or save for a holiday.
- Boost your KiwiSaver contributions – Consider increasing your KiwiSaver contributions. With the added income from tax savings, you could enhance your retirement savings. If you are not already part of kiwiSaver consider joining, by doing this you’ll benefit from your employer’s matching contributions and government incentives.
- Boost your savings – Consider upping your savings contributions. Whether it’s for retirement, a new home, or just a rainy-day fund, every little bit helps.
- Invest in education or new skills – Use this opportunity to invest in yourself. Take a course or training program to improve your skills. This can lead to better job opportunities and potentially higher income in the future.
- Support local businesses – If you have a bit more disposable income, why not support local businesses? Whether it’s dining out, shopping, or services, spending locally can help boost the economy, create jobs and create a positive economic ripple effective.
- Support a charity – Maybe use this extra cash to support a charitable organisation and give back to a cause you are passionate about, making a lasting impact.
- Review insurance policies – With the extra funds, consider reviewing and potentially upgrading your insurance policies. Ensure you have adequate coverage for health, life, and property insurance to safeguard your financial future.
Celebrating even modest increases in income is important in today’s world…
Any financial gain, however small, can boost morale and provide a sense of accomplishment. Recognizing and celebrating these gains can improve mental well-being and motivation, so definitely take a look at the difference in your income this week and maybe use the money for some fun stuff…
- Plan a mini break –Treat yourself and your family to a mini holiday. Explore New Zealand’s beautiful landscapes, visit a new city, or enjoy a weekend at the beach.
- Upgrade your gadgets- If you’ve been eyeing the latest tech, now might be the time to upgrade your gadgets. Whether it’s a new smartphone, laptop, or smart home device, a little splurge can bring a lot of joy.
- Pamper yourself- A spa day, a new wardrobe, or a fancy dinner out – sometimes, a little indulgence is just what you need to rejuvenate and reward yourself for your hard work.
It’s not often we get to experience any tax cuts, the last time was back in 2010, to put that into perspective check out the 2010 to 2024 family photo.
Here’s a recap of what was happening back in 2010:
- Prince William and Kate Middleton announced their engagement
- Angry Birds was the hottest mobile game
- Petrol was a whole dollar cheaper per litre
- Instagram had just launched
- iPad was introduced by Apple
- Toy Story 3 was a box office hit
New Zealand’s latest tax cuts are a breath of fresh air, designed to put more money in your pocket and make life a little bit easier. So, plan wisely, and enjoy the extra financial freedom they offer.
