Major news! Big tax cuts are coming to New Zealand! How much will you save? The Budget is officially out — here are the highlights

New Zealand Finance Minister Nicola Willis released her first Budget today as scheduled, marking a significant moment for her, the coalition government and the National Party. Unlike previous budgets, Willis promised neither lavish spending nor austerity. Instead, she outlined how the government would implement its tax cuts and spending reductions. YIJU has promptly analysed and compiled the following details from the newly released Budget for your reference. Let us look at what surprises the 2024 national Budget has brought and how much each of us stands to gain.

 

New Zealand Finance Minister Nicola Willis

 

 

Tax cut package announced

 

 

In this Budget, the coalition government delivered on National’s election promise of tax cuts. All New Zealand taxpayers earning more than NZ$14,000 a year will receive fortnightly tax cuts of NZ$4 to NZ$40. Finance Minister Nicola Willis said the government would raise income tax thresholds to help account for wage growth.

 

 

From 31 July this year, average-income households will receive up to NZ$102 in tax relief a fortnight, while eligible families can receive up to NZ$150 a fortnight in FamilyBoost childcare support.

 

For example:

 

• If you work full-time, have no children and earn a median wage, you can receive NZ$50.75 in support a fortnight.

• If both partners in your household earn the average wage and have two children in early childhood education, your household can receive NZ$252 in support a fortnight.

 

To find out how much tax you will save, scan the QR code below to use the official tax calculator.

 

Budget details ↓

NZ$2,570,000,000 for tax cuts through adjustments to tax brackets, unchanged from National’s election proposal

NZ$155,000,000 to adjust eligibility for the Independent Earner Tax Credit, in line with National’s election policy

NZ$182,000,000 for the Working for Families In-Work Tax Credit, increasing it by NZ$25 a week, in line with National’s election policy (changes to the abatement threshold were dropped during coalition negotiations)

NZ$729,000,000 to restore interest deductibility for residential rental properties

NZ$45,000,000 to adjust the bright-line test

 

 

Other tax support

 

 

The Working for Families In-Work Tax Credit will increase, giving 160,000 low- and middle-income families with children up to NZ$50 a fortnight in support. The income ceiling for the Independent Earner Tax Credit will also rise from NZ$48,000 to NZ$70,000, making an additional 420,000 people eligible.

 

 

Education

 

 

Associate Education Minister David Seymour

 

Spending initiatives in Budget 2024 include National’s plans to redesign the school curriculum through the Ministry of Education and several of Associate Education Minister David Seymour’s ‘pet’ projects. These include NZ$3,000,000,000 over four years, with NZ$1,500,000,000 for new schools and classrooms, and a further NZ$477,000,000 to reform the school lunch programme, benefiting up to 10,000 preschool children. Nearly NZ$53,000,000 will be allocated over the next four years to help add 1500 teachers. A further NZ$67,000,000 will support the introduction of structured literacy in schools from next year.

 

Meanwhile, the Budget also addresses early childhood education and care costs. The government’s FamilyBoost programme will begin on 1 July, allowing each family to claim up to NZ$75 a week towards early childhood education costs.

Budget details ↓

NZ$1,480,000,000 over four years for property development at schools and kura kaupapa

NZ$199,500,000 over four years for school operating grants

NZ$191,000,000 over four years for early childhood education subsidies

NZ$163,000,000 over four years to maintain school information technology infrastructure

NZ$256,000,000 over four years to increase tertiary tuition and training subsidies by 2.5%

From 1 April 2025, the student loan interest rate for overseas-based borrowers will rise from 3.9% to 4.9%

 

 

Health, disability and social investment

 

 

Over the next four years, the government will invest NZ$8,150,000,000 in health, primarily to address rising cost pressures. This includes NZ$3,400,000,000 for hospital and specialist services and NZ$2,120,000,000 for primary care and public health. Specific measures include funding security staff in emergency departments and extending breast screening to people aged 70–74. Nicola Willis said the Budget did not deliver on National’s promise to fund new cancer treatments, but that work was ongoing.

 

The Budget sets aside NZ$50,500,000 for the Social Investment Agency. This new standalone agency will take effect on 1 July, replacing the social wellbeing agency currently within the Public Service Commission. Its responsibilities include setting standards for social investment practices across government, helping other agencies apply social investment approaches, and continually reviewing social sector spending. Following underfunding in recent years, an additional NZ$1,100,000,000 will be provided over five years to meet the needs of the Ministry of Disabled People.

 

Budget details ↓

The New Zealand Ministry of Health’s hospital and specialist services will receive NZ$3,440,000,000 over four years

NZ$2,120,000,000 over four years for primary, community and public health services

NZ$1,770,000,000 over four years to maintain funding for pharmacists

NZ$1,100,000,000 over five years to address demand and rising cost pressures at the Ministry of Disabled People.

NZ$31,200,000 over four years to expand free breast screening

NZ$30,840,000 over four years to strengthen security in emergency departments (EDs)

NZ$22,000,000 over four years to train an additional 25 doctors annually

NZ$9,700,000 over four years to establish a national mental health and addiction community sector innovation fund

 

 

Transport

 

 

Around NZ$70 will be invested annually over the next three years, partly funded by higher motor vehicle licensing fees. Over the next four years, surf lifesaving services and Coastguard will receive more than NZ$63,000,000. This funding will be dedicated to training, equipment upgrades and the effective implementation of safety measures.

Budget details ↓

NZ$1,000,000,000 over four years to accelerate construction of Roads of National Significance

NZ$939,300,000 over four years to repair roads damaged by Cyclone Gabrielle, the Auckland floods and other North Island weather events

NZ$266,900,000 over four years to upgrade and maintain Auckland and Wellington’s rail networks, including NZ$159,200,000 over two years to complete the rebuild of Auckland’s rail network

NZ$200,000,000 over four years to maintain and renew KiwiRail’s national rail network

NZ$10,000,000 over four years for Air New Zealand to complete ground-based navigation aids and a minimum operating network for the safe recovery of aircraft

NZ$44,000,000 to support the Civil Aviation Authority’s core functions while fees and levy rates are reviewed

NZ$23,100,000 over four years for frontline rescue services responding to severe weather events and emergencies

An additional NZ$1,000,000,000 over four years for the National Land Transport Fund

 

Corrections, policing and defence

 

The government has already announced NZ$19 to increase prison capacity and frontline corrections staffing. Corrections Minister Mark Mitchell said the Budget would also allocate NZ$78,000,000 to extend rehabilitation programmes to remand prisoners. Policing will receive NZ$651,000,000 over 4 years, including NZ$226,000,000 to recruit an additional 500 police officers by the end of 2025 and purchase new vehicles and police equipment, and NZ$242,000,000 to cover outstanding police pay.

 

The Defence Force will receive NZ$571,000,000 in the Budget. Defence Minister Judith Collins outlined a series of spending plans earlier this month, including pay rises, equipment upgrades and the leasing of 35 homes for navy personnel.

Budget details ↓

NZ$226,100,000 over four years for an additional 500 police officers

NZ$424,900,000 over four years to support frontline policing (NZ$242,200,000 for police pay and NZ$6,270 for vehicles and maritime policing capability)

NZ$78,000,000 over three years to extend rehabilitation programmes to remand prisoners

NZ$812,800,000 over five years for Corrections to respond to rising prisoner numbers

NZ$43,400,000 in expenditure offset over four years by increasing court filing, enforcement and fine collection fees

 

 

Housing

 

 

Housing Minister Chris Bishop revealed last week that the First Home Grant scheme would be cut, with the Budget allocating NZ$140,000,000 to fund 1500 new social homes. This funding will become available from July next year. The government opposes a ‘one-size-fits-all’ approach and wants a range of housing providers to supply homes for those in need.