From 1 April 2026, new payroll changes are being implemented. It is important to understand these changes and effectively enact them within your business. At Moore Markhams, we understand these changes can impact your business, so we have provided a summary of the changes.
Minimum Wage Increase
Effective from Wednesday 1 April 2026, new minimum wage rates will be applicable. It is critical that all businesses check their employee pay rates in a timely manner. It is also important to check your staff’s length of continuous service for starting out/training employees, as after 6 months they should increase to adult minimum wage.
| Adult | Increasing from $23.50 to $23.95 |
| Starting Out/Training | Increasing from $18.80 to $19.16 (80% of adult minimum wage) |
(Refer to Employment NZ website for the criteria & more information on applicable employee rates).
Student Loan Threshold – No change to 2025 year
The student loan threshold is $24,128 annually, and student loans are deducted at 12% of every dollar over the repayment threshold amount:
- $464 per week
- $928 per fortnight
- $1,856 four-weekly
- $2,010.66 per month
ACC Levy increase for 2026/2027 tax year
The ACC Earners’ Levy is increasing from 1.67% to 1.75% per $100 earned for any pays created with a pay date on or after 1 April 2026. The maximum liable earnings threshold will also be increasing from $152,790 to $156,641.
The PAYE thresholds are:
| Income | Tax rate + ACC Levy |
| Up to $15,600 | 10.5% plus ACC 1.75% |
| $15,601 to $53,500 | 17.5% plus ACC 1.75% |
| $53,501 to $78,100 | 30% plus ACC 1.75% |
| $78,101 to $156,640 | 33% plus ACC 1.75% |
| Earnings greater than $156,641 do not have the ACC levy applied. | |
| $156,640 to $180,000 | 33% no ACC |
| Over $180,001 | 39% no ACC |
With the change to ACC and income thresholds there will be a reduction in net payments to employees. If you have automatic payments set up for employees, it is important that these are updated. The minimum liable earnings on which self-employed individuals pay Work and Earners’ levies will be increasing to $50,501. The Independent Tax credit threshold for ME tax code will apply for employee earnings $24,000 to $70,000.
KiwiSaver Minimum Rate Changes
From 1 April 2026, the default minimum KiwiSaver contribution rate for both employees and employers increase from 3% to 3.5%. This will apply to employees who have not applied for a temporary reduction rate. Employers are required to contribute at least 3.5% of the employee’s gross income for pay periods with a pay date on or after 1 April 2026. Employees can elect a higher rate of 4%, 6%, 8% or 10%, which employers are not obligated to match.
Inland Revenue have updated the KS2 Membership form.
KiwiSaver Temporary rate reduction:
From 1 February 2026, employees can apply directly to Inland Revenue for a temporary reduction to 3%, for a period of between 3 and 12 months. As an employer, you may choose to match the reduced rate, but it is not mandatory.
Note: While applications are available from 1 February, the temporary rate reduction won’t apply until 1 April 2026.
Employers have to be notified by IRD or receive the temporary rate reduction certificate from the employee before the reduction can be made. When the rate reduction period ends both employee and employer minimum rates must change back to 3.5%
KiwiSaver Ages and Non-permanent Employees
From 1 April 2026, employees aged 16-17 who are enrolled in KiwiSaver become eligible for compulsory employer contributions. New employees under 18 are not automatically enrolled into KiwiSaver. They need to apply for membership, if not already a member, and with parental/guardian approval they can opt-in to KiwiSaver. Once the employee turns 18, they can opt-in.
Over 65 years of age, automatic enrolment does not apply, but it is optional for an employee to have deductions from their wages, and it is optional for the employer to contribute or not.
Casual or temporary employees are not automatically enrolled, but if they are a member then deductions and contributions apply. Employees are required to fill in a KS2 to inform employers. IRD send letters to employers to make changes to employees tax code, KiwiSaver, student loan, and child support where applicable, if they disagree what is being recorded in payroll.
Employer KiwiSaver Superannuation Contribution Tax – ESCT Rates – No change
The employer KiwiSaver contribution is taxed, and this percent is dependent on the employee’s expected annual income plus the employer’s annual gross KiwiSaver contributions.
These rates need reviewed for the start of the new tax year.
| Combined Total Expected Annual Income & KSR (Employer Contributions) | ESCT Tax rate |
| $0 to $18,720 | 10.5% |
| $18,721 to $64,200 | 17.5% |
| $64,201 to $93,720 | 30% |
| $93,721 – $216,000 | 33% |
| $216,001 upwards | 39% |
IRD number validation
As of 1 April 2026, the valid range of IRD numbers will increase from 150-000-000 to 200-000-000. Employees with IRD numbers under 99-999-999 should add a 0 to the start of their IRD No.
Processing wages at the end of March 2026/beginning of April 2026.
Pay period end dates can be different from an employees’ actual pay day. The pay day date is the one that is used for pay-day filing to Inland Revenue, and if this falls on or after 1 April 2026 then the above payroll changes will come into effect. As the ACC/PAYE taxation rates are changing from 1 April, we recommend you should check your pay day and, if before 31 March 2026, ensure it is filed in that year. If your pay day is 1 April or after that the payday file will go into the 2026/2027 tax year. Payroll software should be updated, but if you are using the manual PAYE calculators you will need to use the 2027 year after 1 April. These will be available via the IRD site – PAYE Calculator.
Reminders: End of Year tasks
- Check all employee payrates and update accordingly for the new minimum wage.
- Amend any automatic payments set up for wages as the ACC content of PAYE has changed.
- Check employee ESCT rates if they are KiwiSaver members. Check their combined annual income plus employers gross KiwiSaver contributions for the 31-3-2026 year or their expected annual income for 31-3-2027 and amend their ESCT rate if their annual income has changed.
- Review employee leave profiles. This should be done on their annual anniversary to ensure they are receiving the correct leave accruals. (4 weeks annual leave (minimum) and 10 days sick leave (whether they work 1 or 7 days per week)). Sick leave anniversaries are generally 6 months after an employee’s start date and then annually there-after.
- Annual Earnings Certificates – this is optional to send to employees but you are not legally obligated to.
Speak to an expert
Moore Markhams are experienced professionals when it comes to understanding payroll changes. We have the tools in place to provide a comprehensive strategy for you and your business. Get in touch with one of our experts today by clicking here.
Employment NZ website https://www.employment.govt.nz/
Inland Revenue https://www.ird.govt.nz/
About the Author
Judy Toomer is a Senior Payroll Administrator at Moore Markhams Otago. Judy has been working her payroll magic for Markhams for 18 years and loves nothing more than untangling a messy payroll and supporting her clients to navigate the complex world of payroll legislation.
