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The famous landscapes, the friendly people, and the excellent quality of life in New Zealand have already drawn thousands of Americans to the country — but others hold off on making a move due to concerns about taxes in New Zealand.
While finding accurate, easy-to-understand information about complex subjects like taxes can be a challenge, our team of expat tax experts is here to break things down for you. What’s more, the tax burden for US expats living in New Zealand may be a lot lower than you might think.
Read on for our comprehensive overview of tax obligations for US citizens living in New Zealand!
Snapshot of taxes in New Zealand
- Primary tax forms: IR3
- Tax year: April 1st to March 31st
- Tax deadline: July 7th for individuals, March 31st of the following year if you are working with an accountant and qualify for an extension
- Reporting website: Inland Revenue Department
- Administrative language(s): English, Māori
- Tax treaty: Yes
- Totalization agreement: No
Who qualifies as a tax resident in New Zealand?
There are two types of criteria that New Zealand uses to determine tax residency. The first is the amount of time that you spend in the country. US citizens who spend over 183 days in New Zealand within any 12-month period will be considered tax residents. Additionally, maintaining a permanent abode in New Zealand will also qualify you as a tax resident.
Here, a “permanent abode” is defined as a place where you normally live. The New Zealand government will look at various factors to assess whether you maintain a permanent abode there, including:
- How often you visit New Zealand
- How much time you spend there
- Whether you have familial and/or social ties there
- Whether you have economic interests there
- Whether you have employment or business ties there
- Whether you plan to live in New Zealand on a long-term basis
Tax residents are taxed on their worldwide income, but certain new or returning migrants who qualify as transitional tax residents are exempt from taxes on many types of foreign-sourced income for up to four years.
Non-tax residents, meanwhile, are only subject to taxation on income sourced or earned in New Zealand.
Common visas for US expats in New Zealand
Most US expats who meet the definition of New Zealand tax residency have a visa that allows them to stay there on a long-term basis. Some of these visas include the:
Accredited employer work visa
The New Zealand accredited employer work visa allows Americans with a job offer from an accredited New Zealand employer to live and work in the country for up to three years.
Temporary retirement visitor visa
The New Zealand temporary retirement visitor visa allows those over 66 years old to live in New Zealand for up to two years, provided that they have:
- At least NZD $750,000 (~$450,000 USD) to invest in New Zealand
- At least NZD $500,000 (~$300,000 USD) to live off of
- An annual income of at least NZD $60,000 (~$36,000 USD)
Entrepreneur work visa
The New Zealand entrepreneur work visa allows business owners to live and work in a self-employed capacity for up to three years.
Pro tip:
With respect to all of the visas discussed above, after the visa validity period has passed, all holders may be eligible to apply for residence. Be sure to review the specific conditions for your visa carefully if this is your objective.
Partnership visas
New Zealand’s partnership visas allow partners of New Zealand citizens and residents, workers, and students (among others) to live and work in the country. The duration and ability to extend the visa will vary depending on your partner’s permission to live in the country.
Working holiday visa
The New Zealand USA working holiday visa allows Americans between ages 18 and 30 to live and work in New Zealand for up to twelve months, or work and study for up to six months. Upon expiration, holders may apply for a working holiday extension work visa to stay up to three months longer.
Student visas
New Zealand’s student visas allow those who wish to study in the country to live and study for up to four years. (With the proper permission, it may also be possible to work while studying.). Upon expiration, holders may be able to apply for a post-study work visa, which lasts up to three years.
Income tax rates in New Zealand
According to the New Zealand Internal Revenue Department (IRD), tax rates in New Zealand for the 2023 tax year are as follows:
| Income (NZD) | Income (USD)* | Tax rate | Tax Owed (NZD) | Tax Owed (USD)* |
| Up to $14,000 | Up to ~$8,395 | 10.5% | 10.5% of total earnings | 10.5% of total earnings |
| Between $14,000 & $48,000 | Between ~$8,395 & ~$28,784 | 17.5% | $1,470 + 17.5% of amount over $14,000 | ~$882 + 17.5% of amount over ~$8,395 |
| Between $48,000 & $70,000 | Between ~$28,784 & ~$41,976 | 30% | $7,420 + 30% of amount over $48,000 | ~$4,450 + 30% of amount over ~$28,784 |
| Between $70,000 – $180,000 | Between ~$41,976 & ~$107,928 | 33% | $14,020 plus 33% of amount over $70,000 | ~$8,406 + 33% of amount over ~$41,976 |
| Over $180,000 | Over ~$107,928 | 39% | $50,320 plus 39% of amount over $180,000 | ~$30,167 + 39% of amount over ~$107,928 |
Fortunately, New Zealand has no local or regional income taxes.
*Calculations for USD based on mid-market rate per Xe currency converter as of 11/3/2023.
Are taxes high in New Zealand?
Many Americans considering a move to the land of the Long White Cloud worry about the higher taxes in New Zealand vs the USA. For example, using the table above, someone earning New Zealand’s average annual salary of NZD $97,300 (~$58,330 USD) would owe a total of NZD $23,029 (~$13,813 USD) in income taxes in New Zealand. In the US, however, a single filer would owe just about $13,803 USD (NZD $23,290) in federal income taxes on the same amount, per US tax rates.
It’s worth noting, though, that the cost of living in New Zealand is significantly lower than in the US. According to Numbeo, New Zealand ranks lower in rent (40.5% less), groceries (10% less), restaurant prices (16.7% less), and basic utility prices (36.6% less) compared to the United States.
What’s more, New Zealand offers more social services for taxpayers, such as universal healthcare, subsidized child care, more affordable higher education, and more.
Other common taxes in New Zealand
When you’re living in New Zealand, there will be other taxes to consider beyond income taxes. Below, we outline a few of the ones that are most top-of-mind for expats.
Property taxes in New Zealand
There are several different types of property taxes in New Zealand.
Property ownership taxes
Vary by region and value of property. Many local governments allow you to search rates by your address, including expat hotspots like Auckland, Christchurch, Otago (where Queenstown is located), and Wellington.
Taxes on property sales
Generally, you will have to pay taxes on property sales if you:
- Bought it with the intention of reselling
- Have a history of buying and reselling property
- Are in (or are associated with someone who is in) the property business, such as a dealer, developer, or builder
- Sold a non-primary home after living there for less than 10 years
The amount you earn from a property sale is factored into your overall taxable income, and then taxed at the applicable marginal rate of 10.5% to 39%.
Pro tip:
New Zealand permanent residents and citizens living abroad may need to pay an additional residential land withholding tax (RLWT) when selling property.
Taxes on property purchases
New Zealand does not levy a stamp duty tax or taxes on property inheritance or property gifted by a partner. However, you can expect to pay between roughly $1,240 to $2,500 USD for valuation fees, building inspection reports, the Land Information Memorandum (LIM), transfer fees, legal fees, etc.
Capital gains tax in New Zealand
New Zealand has no blanket capital gains tax, but the profits from the sale of certain assets may be taxed differently, such as property (as mentioned above) and interest and dividends, which are typically taxed at a rate of 33%.
A quick note for nonresidents
Non-resident taxpayers pay a flat tax of 15% on interest and 30% on dividends earned or sourced in New Zealand.
Business tax in New Zealand
Corporate income tax in New Zealand
New Zealand taxes businesses differently according to their specific type:
| Business Type | Rate |
|---|---|
| Most companies | 28% |
| Eligible non-profits | 28% |
| Trusts & trustees | 33% |
| Māori authorities | 17.50% |
| Unincorporated organizations | Individual tax rate |
Some of the most common industries in New Zealand include agriculture, forestry, manufacturing, and professional services like finance, insurance, property, and other business services.
Payroll tax in New Zealand
Employers in New Zealand withhold employees’ income taxes according to their income bracket and tax code. Payroll taxes also include the following contributions:
| KiwiSaver (Pension) | Accident Compensation Corporation (ACC) | |
|---|---|---|
| Employee contribution | Optional | 1.39% |
| Employer contribution | 3% | 1% |
If applicable, you may also have the following taxes withheld from your paychecks:
- Child support: Up to 40%
- Student loan payments: 12% of every dollar above the repayment threshold
Self-employment tax in New Zealand
Self-employed individuals are taxed at the same rate as any other individual. Certain self-employed individuals may be able to have their clients withhold their taxes from their payments via schedular payments, but those who don’t must proactively pay:
- ACC taxes
- Earner’s levy: 1.21%
- Worker’s levy: .08%
- Work levy: Varies based on industry risk
- Student loan repayments
- 12% of every dollar above the repayment threshold, if applicable
- KiwiSaver
- A minimum contribution of 3% for those who choose to participate
Self-employed individuals earning more than NZD $60,000 (~$35,990 USD) must also charge clients/customers a VAT of 15%, which they will then pass along to the government.
Tax breaks for self-employed New Zealand tax residents
The IRD permits a few business tax breaks you may be able to leverage as a self-employed individual living in New Zealand, including:
- Home office expenses
- Vehicle expenses
- Meal expenses
- Depreciation
- The Independent Earner Tax credit
VAT
The value-added tax — aka the tax added to the sale of most goods and services — in New Zealand is known as the goods and services tax, or GST. The standard rate is 15%, but there is a discounted rate of 0% on certain items and services. According to the IRD, these include:
- Financial services
- Residential accommodation
- Exports
Who has to file tax returns in New Zealand
Not everyone has to file a tax return in New Zealand. Individuals whose only source of income is New Zealand-sourced wages, interest, and dividends, for example, are not required to file a tax return. Those who do have to file tax returns include:
- Those with self-employment or business income
- Those who have earned more than NZD $200 (~$120 USD) that has not already been taxed in New Zealand (e.g. income sourced overseas or foreign rental income)
- Those who want to take advantage of tax breaks
Pro tip:
Self-employed US expats living in New Zealand who are not eligible for schedular payments and have paid more than NZD $5,000 (~$3,000 USD) on their previous year’s tax returns may pay their tax bills in tri-annual installments called provisional taxes throughout the year.
US tax advice for US citizens living in New Zealand
Any US citizen or permanent resident living in New Zealand (or any other country in the world, for that matter) must file a federal tax return as long as they meet the minimum income reporting threshold. A few dates to keep in mind include:
- April 15th: Tax bill due date
- June 15th: Standard tax return due date
- October 15th: Tax return due date for those who have filed an extension
FBAR filing requirements for US citizens in New Zealand
The FBAR filing requirement applies if you have foreign accounts (checkings, savings, investment, pensions, etc.) totaling over $10,000 USD. If so, you’ll have to complete a Foreign Bank Account Report (FBAR) by filing FinCEN Report 114.
FATCA considerations for US citizens
Similarly, if you have foreign assets exceeding $200,000 USD by the last day of the tax year — or $300,000 USD at any point in the year — you’ll also need to file Form 8938.*
*Numbers provided apply to single filers only — please refer to our article about Form 8938 for more information
Common tax deductions available for US expats in New Zealand
US expats living in New Zealand may technically be at risk of double taxation due to the countries’ conflicting tax systems, but thankfully, there are a host of provisions available to offset this burden. In fact, when applied strategically and correctly, living abroad as a US expat may ultimately become more financially beneficial than living in the US.
Foreign Tax Credit (FTC)
The Foreign Tax Credit (FTC) provides Americans with dollar-for-dollar tax credits on any taxes they’ve paid to a foreign government, so long as they are legal, based on income, made out in their name, and paid. Although the credit is nonrefundable, any excess credit can be applied towards reducing your US tax bill on foreign income for up to 10 years.
Foreign Earned Income Exclusion (FEIE)
The Foreign Earned Income Exclusion (FEIE) allows Americans abroad to exclude up to $112,000 USD (2022) of their income from taxation ($120,000 USD for tax year 2023). Along with the FEIE, you may also be able to exclude qualifying housing expenses via the Foreign Housing Exclusion.
To qualify for the FEIE, you must meet one of two residence-based tests: the Physical Presence Test or the Bona Fide Residence Test.
Child Tax Credit (CTC)
The Child Tax Credit offers all US taxpayers a partially refundable tax credit of up to $2,000 USD per qualifying child, provided that they meet the criteria. However, when filing for the 2022 tax year in 2023, most expat parents can expect to receive a partial refund of up to $1,500 USD per qualifying child due to common international tax filing circumstances.
Pro tip:
Understanding how to qualify for (and even retroactively claim) the CTC can be complicated, especially when you consider the brief changes that accompanied the American Rescue Plan Legislation in 2021. We’ve got all of this covered and more in our complete guide to the Child Tax Credit.
US-New Zealand tax agreements
For US expats, understanding whether their foreign country of residence has a tax treaty or a Totalization Agreement with the US is very important. Below, we break down the difference between these two types of agreements, and explain why they matter.
US-New Zealand Tax Treaty
The United States-New Zealand Tax Treaty helps US expats living in New Zealand avoid double taxation with regard to income tax, corporate tax, and capital gains tax — at least in theory. In practice, a tricky savings clause allows the US to tax citizens as if the agreement didn’t exist. As a result, you’re usually better off claiming one of the tax breaks mentioned above.
Some Americans living in New Zealand are more likely to benefit from the treaty than others, though, including:
- Artists
- Teachers
- Athletes
- Students
- Recipients of certain types of income, such as dividends, interest, royalties, and pensions
Expats with these types of income should consult a US expat tax specialist to check if they can benefit from the US-New Zealand tax treaty. Those who can claim a provision in the treaty should do so by filing IRS Form 8833.
US-New Zealand Totalization Agreement
Totalization agreements are treaties between governments that prevent citizens/residents of one country living in another from having to pay social security taxes to both countries. There is no such agreement between the US and New Zealand.
However, New Zealand’s equivalent of social security taxes — KiwiSaver, aka pension, taxes — are optional. Those who choose to participate must make a minimum contribution of 3% of their pay.
How to sort out overdue US tax returns
In some cases, you may have failed to file income tax returns in previous years because you were unaware of the filing requirement. If this describes your situation, you may be able to benefit from an IRS amnesty program called the Streamlined Procedure. In order to qualify, you must initiate the process before the IRS contacts you about your missing returns. You’ll file your last three tax returns, last six FBARs, pay any outstanding taxes, and certify that your previous non-compliance was non-willful. Additionally, this procedure is penalty-free.
Resources:
- Extension of time arrangements
- Tax residency status for individuals
- Tax residency: New Zealand transitional residency unpacked
- What is the average salary in New Zealand 2023?
- Cost of Living Comparison Between United States and New Zealand
- When you need to pay tax on property sales
- Offshore people who pay RLWT
- Buying and selling situations
- The Australian and New Zealand property markets and buying processes
- Resident withholding tax (RWT)
- Taxation of international executives: New Zealand
- Tax rates for businesses
- Story: Industrial sectors
- Payroll and Benefits Guide – New Zealand
- Deductions from salary and wages
- Nineteen years after the ‘fart tax’, New Zealand’s farmers are fighting emissions
