NZ Payroll: 2026/27 Tax Year & KiwiSaver Rate Changes

Last Updated: March 2026 Applicability: New Zealand Payroll Only Effective Date: April 1, 2026

Overview

The 2026/27 New Zealand tax year includes changes to the default KiwiSaver contribution rates. To assist with this transition, our system will perform automated uplifts for applicable records.

This guide covers the statutory changes, the automated logic being applied, and the manual actions required by Payroll Administrators to ensure year-end compliance.

⚠️ The automatic uplifts apply for pay runs on or after 1st of April/

1. Summary of Statutory Changes & Action Items

The following table summarizes the updates effective for all pay periods with a Pay Date on or after April 1, 2026. Please review the Action Required column to identify manual tasks.

Note: Income Tax (PAYE) thresholds remain unchanged for the 2026/27 tax year as no new legislation has been passed to alter the current brackets.

2. Automated KiwiSaver Uplift Logic

To maintain most of your workforce up to date with the new default minimums, the system will automatically identify and update specific KiwiSaver Pay Component (EPC) records.

What will be updated?

• Employee Deductions: Active records currently set at 3.0% will be increased to 3.5%.
• Employer Contributions: Active records currently set at 3.0% will be increased to 3.5%.

What will NOT be updated?

• Voluntary Higher Rates: If an employee has elected to contribute 4%, 6%, 8%, or 10%, their rate will remain unchanged.
• Inactive Records: Terminated employees or inactive components will not be processed.
• Temporary Exemptions: if your employee has let you know they are exempt please set those back to 3% manually.
• 16-17 year old newly eligible employees > you set them up as you are used to for any new employee.  NOTE: If the Date of Birth field is blank the employee will NOT be updated by the system script

3. Required Administrator Actions

While the system handles the default uplift, two manual processes must be verified or completed by the Payroll Administrator.

A. Handling Temporary Rate Reductions (Exemptions)

Under 2026 IRD rules, specific employees may be eligible for a Temporary Rate Reduction (TRR) to remain at a 3% contribution rate.

Since the system defaults all 3% records to 3.5% to the new normal, you must manually revert these specific cases:

1. Navigate to the Employee Record > Payroll tab.
2. Open the Kiwisaver Employee Deduction Employee Pay Component record.
3. Manually edit the rate back to 3.0%.
4. Best Practice: Attach the IRD certificate number in the Memo or Notes field for audit purposes.

B. Annual ESCT Review & Bulk Update

Employer Superannuation Contribution Tax (ESCT) rates do not "roll over" automatically. ESCT rates do not "roll over" automatically because they are calculated based on the employee's total gross salary plus employer KiwiSaver contributions from the previous tax year (ending March 31, 2026).

Administrators must review each employee's ESCT rate based on their total gross salary plus employer KiwiSaver contributions from the previous tax year (ending March 31, 2026). Follow this guide. The rates and threshold remained unchanged for 2026/2027 tax year. Always check the IRD website before taking any action.

How to update ESCT Rates in bulk:

1. Go to Menu > Payroll Administration > Payroll Set Up > Update Employees Deployment.
2. Select the Subsidiary you want to apply the settings to.
3. Under Update Action, select NZ ESCT Rates.
4. Choose the Tax Year (ensure you select the new 2027 Tax Year).
5. Update the Estimated Income and ESCT % for each applicable employee based on the thresholds below.
6. Click Update Employees to apply changes.

4. Audit Checklist

Before processing your first pay run in April 2026, ensure the following is complete:

• [ ] Verify KiwiSaver Rates: Check that 3% contributors have been moved to 3.5%.
• [ ] Apply TRR Exemptions: Manually adjust any employees with valid 3% certificates.
• [ ] Update ESCT Rates: Ensure rates reflect the 2025/26 actual earnings.
• [ ] ACC Verification: Confirm the new 1.75% rate is calculating on the first April pay slip.

Need further assistance? If you encounter any issues with the automated uplift, please submit a support ticket via the Customer Portal or contact your Account Manager.