How New Zealand taxes a retirement plan
Every figure this model charges in New Zealand, what each one means, the tax office page it came from, and the date we last read it. Plus everything the model does not do here.
The tax chapter of what the model assumes about New Zealand.
Figures are for the 2026 tax year, read from the authorities on 2026-07-29. Every one of them links to the page it came from. 4 of them we could not source: we hold the figure and could not find an authority page stating it. Those are marked, and they are the ones most likely to be wrong. If you know better, tell us.
Checked against their calculator.
The scale your pension and other ordinary income are charged on. Each band's rate applies only to the part of your income inside it, not to all of it.
How money held outside a retirement account is charged: on what it pays you each year, on the profit when you sell, or both.
- Charged howaggregated
- Whether investment income joins your other income on the same scale or is charged separately. It decides whether taking more from your portfolio pushes your pension into a higher band.
- source
- Charged as it pays outyes
- Whether income the investment pays you is charged in the year it arises, rather than only when you sell.
- source
Yearly tax on an assumed return from foreign sharesFIF fair dividend rate
New Zealand taxes most foreign shares on an assumed return of 5 percent of what they were worth at the start of the year, whatever they actually earned, and then does not tax their dividends or their gains on top. If they earned less than that over the year you are taxed on the smaller figure instead, and in a year they lost money you are taxed on nothing.
- Assumed yearly return5%
- The return the country assumes you made. The charge is worked out from this, not from what your portfolio actually did.
- source
- Capped at your real gainyes
- The charge cannot exceed what you actually made, so a bad year costs you nothing here.
- source
- Counts against the later billno
- What you pay now is credited when you eventually sell, so the same growth is not charged twice.
- source
- Charged on the main scaleyes
- The assumed return joins your other income rather than being charged at its own flat rate.
- source
What a loss can be set against, and whether anything left over can be carried into future years.
- Carried forward for0
- How many years an unused loss survives to be set against future gains. Zero means it is lost at the end of the year.
- source
- Locked to one kind of assetno limit
- A loss on one kind of investment can only be set against gains of the same kind.
- source
- Against other income, up tono limit
- The most a loss can take off your ordinary income in one year.
- source
- Share usable against other income0
- How much of a leftover loss can be set against income that is not investment income.
- source
What happens when you draw from a pension or retirement account: the whole withdrawal counted as income, a set rate, or nothing at all.
- On the way outexempt
- Whether a withdrawal counts as income in full, is charged at one set rate, or is free of tax.
- source
Whether a couple is assessed as one household or as two people, which can change the bill substantially at the same total income.
- How a couple is assessedsplitting
- Whether the two incomes are pooled, split evenly, or taxed entirely separately. At the same household income these give very different bills.
- no source found
equity
Where this country's answer changes depending on the kind of investment, this is what we assume unless you say otherwise.
A threshold frozen in law quietly costs more every year, because your income rises with prices and the threshold does not. Over a thirty-year retirement that is one of the larger effects on this page.
- the income tax bands · Keeps up with inflationno
- If no, this figure is fixed in law. Your income rises with prices and it does not, so it costs you more every year without any rule changing.
- source
- an ordinary investment account · Keeps up with inflationno
- source
- FIF fair dividend rate · Keeps up with inflationno
- source
Where you live inside the country
Nothing below the national level taxes income here, so one set of figures is right for the whole country. This is a finding rather than a gap.
What this model does not do here
Every one of them, not a selection. 17 are described below, and 4 more are recorded in the model but not yet written up for readers.
We model these and we know we do not get them exactly right. Where the size could be measured, it is stated.
New Zealand taxes the gain or loss on bonds, term deposits and foreign currency accounts as income, whether or not you would call it capital, with a wash-up when the holding matures or is sold. We tax the whole of your bond return as interest in the year it arises instead. For a bond held to maturity at its face value that is the same money in a different year, which is what the worked cases assume.
Could go either way/anyone holding bonds, term deposits or a foreign currency account in a New Zealand taxable account
A foreign country usually keeps some tax on the dividends its shares pay before the money reaches you. New Zealand lets you count that against the tax on your foreign shares, up to the rate its treaty with that country sets, and anything above that is lost with no way to carry it forward. We model neither the tax kept nor the credit for it, so both sides are missing and they largely cancel.
Could go either way/anyone holding foreign shares or funds that pay dividends
These exist in law and we leave them out, usually because applying them would need a question we do not ask.
Most New Zealand managed funds, and every account in KiwiSaver, the country's workplace savings scheme, are taxed inside the fund at a rate capped at 28 percent. That income never reaches your tax return, so it cannot push your pension into a higher band. We price your money as though you held the shares directly, which is dearer: across three worked cases, holding through a fund saves 512, 2,170 and 9,180 a year. In a falling year it reverses.
Your real tax is lower/up to $9,180 a year/anyone holding New Zealand managed funds or a KiwiSaver balance, which is most New Zealand savers
Wages in New Zealand carry an accident compensation levy of 1.75 percent, capped at 2,741 a year for 2026 and rising the year after. It never touches a pension or investment income, so it cannot reach a retiree, and we do not charge it on wages either. Anything you earn before you retire is therefore shown with slightly too little tax on it.
Your real tax is higher/up to $2,741 a year/anyone still earning a wage in New Zealand before they retire
We charge that assumed return on your foreign shares whatever they cost you. The law only reaches you once the total cost of your foreign shares passes 50,000, and it doubles that for a couple who own them together. Below the line we charge you anyway, inventing up to 2,500 a year of income you do not owe tax on, worth about 825 a year to someone on a 33 percent rate. A rise to 100,000 was proposed in 2026 and has not become law.
Your real tax is lower/up to $825 a year/anyone whose foreign shares cost under 50,000, or under 100,000 owned jointly with a partner
New Zealand's one personal tax credit is worth 10 a week, at most 520 a year, on income between 24,000 and 70,000, and it shrinks away above 66,000. The law denies it to anyone receiving the state pension, which is every retiree we model, so leaving it out costs a retiree nothing. It does mean we withhold it in any working years before your pension starts.
Your real tax is lower/up to $520 a year/anyone still working on 24,000 to 70,000 a year before their New Zealand pension starts
This is the sharpest edge in the New Zealand system and we do not carry it. The rate your managed fund charges on its own income is set by your taxable income in either of the two previous years, and it steps from 17.5 to 28 percent once that income passes 53,500, or 78,100 counting the fund's income as well. Taking one extra 10,000 in a single year can therefore raise the rate on your whole fund balance for the next two years, and nothing here will warn you.
Could go either way/anyone with money in New Zealand managed funds whose taxable income sits near 53,500 or 78,100
Since 2019 the costs of a residential rental can only be set against rental income, and anything left over waits for future rent rather than reducing the tax on your pension. We let it reduce your pension tax, so a plan whose rental costs outrun its rent shows less tax than you would pay. Worth watching over a long plan: the rules on setting mortgage interest against rent went from full to none and back to full inside four years.
Your real tax is higher/anyone whose New Zealand rental costs more to run than it brings in
A gain on shares or property is taxable in New Zealand if you bought the asset meaning to sell it on, or if you deal for a living. There is no bright line for shares, and the test turns on what you intended when you bought. We assume you are a long-term investor and show no tax on any gain, so an active trader's bill would be higher than anything on this page.
Your real tax is higher/anyone who buys shares or property intending to sell them on, or who trades for a living
A pension pot you built up abroad before moving to New Zealand is taxed under its own rules when you cash it in or transfer it, and we do not model that. Regular payments from a foreign pension we do handle, as ordinary income on the same scale as any other pension. Australian retirement savings are exempt, and moving them into KiwiSaver, New Zealand's workplace savings scheme, is free of tax.
Your real tax is higher/anyone who moved to New Zealand with a pension pot abroad and plans to cash it in or transfer it
Separate tax systems, or rules that only bite outside a retirement plan.
Residential land sold within two years of buying it is taxed on the gain whatever your reason for selling, with your main home excluded. It is a one-off property event rather than a yearly charge, so it sits outside what we model. Treat the two-year window as liable to change: it has been two years, then five, then ten, and two again, inside nine years.
Could go either way/anyone buying and selling New Zealand residential property other than their main home inside two years
There is a second assumed-return method for unusual foreign holdings, and its rate is set each year by the tax authority rather than fixed: 7.84 percent for 2025-26, against 8.04 and 8.63 in the two years before. It only applies where comparing against the actual return is impractical, so it will almost never reach someone holding ordinary listed shares or funds, and we leave it out.
Could go either way/anyone holding unlisted or otherwise unusual foreign shares, which is almost nobody in a retirement plan
A newer method taxes 70 percent of the gains you actually realise plus your dividends in full, but it is open only to someone who became a New Zealand tax resident recently after at least five years away, and only for unlisted foreign shares they already held. A wider version covers people taxed elsewhere because of their citizenship. None of it reaches a settled retiree holding listed shares or funds.
Could go either way/recent arrivals in New Zealand holding unlisted foreign shares, and United States citizens living there
New Zealand has no wealth tax, no inheritance or estate tax, no gift duty, no stamp duty and no tax on financial transactions. Estate duty ended for deaths after 1992 and gift duty in 2011. Nothing is missing from your figures on this account, because there is no such charge to leave out.
Could go either way/anyone expecting a charge on wealth, on a gift, or on what they leave behind
Councils charge rates on the value of the land your home sits on, and the bill for similar houses varies by a factor of two or more between the country's 78 councils. It is a charge on the home rather than on your savings, so it belongs in your housing costs rather than in your tax, and we put no figure on it.
Could go either way/anyone who owns their home in New Zealand
There is no state, provincial or city income tax anywhere in New Zealand, so where in the country you live makes no difference to the answer and we never ask. The income tax figure on this page is the whole of it.
Could go either way/everyone with a New Zealand plan, wherever in the country they live
KiwiSaver, New Zealand's workplace savings scheme, has rules on the way in that we do not model: a minimum employer contribution of 3.5 percent of pay from April 2026, rising to 4 percent in 2028, and a government top-up of 25 cents for every dollar you put in, worth at most 260.72 a year and nothing at all above 180,000 of income. These build the pot rather than tax the drawdown.
Could go either way/anyone still contributing to KiwiSaver before they retire
Every other figure we use for this country (10)
The sections above cover what shapes a retirement plan. These are the rest of what the model reads, listed so nothing it uses is hidden from you.
balance_charges[FIF fair dividend rate].holdings[0]foreign_fundsourcebalance_charges[FIF fair dividend rate].nameFIF fair dividend ratesourcecapital_incomeaggregatedsourceholdings.equity.items[1].delta.dividend_credit_rate0.28sourceholdings.equity.items[1].delta.dividend_gross_up0.3888888888888889sourceholdings.equity.items[1].delta.dividend_taxable_share1sourceholdings.equity.items[2].delta.dividend_taxable_share1sourceordinary.flat_rate0no source foundordinary.rental_baseordinarysourceordinary.surtax_on_tax0no source found