As the new fiscal year rolls in (yep, already!), it’s time for Kiwi businesses to gear up for some important payroll and tax updates kicking off on April 1, 2025. From tweaks to the minimum wage to changes in tax thresholds, there’s quite a bit to unpack. But don’t stress, I’ve broken it all down for you. The goal? Help you stay compliant, pay your people right, and avoid any April headaches.
Key minimum wage increases for 2025
Let’s start with what’s hitting most payrolls: minimum wage increases. From April 1, the new government-mandated rates come into play and while they’re not huge jumps, they do require action.
Here’s what’s changing:
| Wage Category | 2024 Rate | 2025 Rate | Increase |
|---|---|---|---|
| Adult Minimum Wage | $23.15/hour | $23.50/hour | +$0.35 |
| Starting-Out Wage | $18.52/hour | $18.80/hour | +$0.28 |
| Training Wage | $18.52/hour | $18.80/hour | +$0.28 |
Did you know?
According to MBIE, over 170,000 workers in New Zealand were earning minimum wage in 2024. That’s a big group so if your business relies on part-time, entry-level, or seasonal staff, you’ll want to double-check you’re compliant.
What you need to do:
- Check your payroll system like Xero or Hnry reflects the new rates
- Update manual settings or templates
- Use bulk update tools if your software offers them
- Don’t assume automation does it all — double-check
Some software includes “Minimum Wage Top Up” features that help with compliance. But remember — the final responsibility is still on you to make sure everyone’s getting paid fairly.
Tax-related modifications impacting your payroll
Now let’s talk tax. Several updates are coming into play in April 2025, and while they might seem small on paper, they’ll impact your payroll calculations especially for businesses with higher earners or employer contributions.
ACC Earners’ Levy
- Current rate: 1.60%
- New rate: 1.67%
- Threshold rising: $142,283 → $152,790
This affects all employees even if they’re not earning six figures. Everyone will see a slight reduction in take-home pay due to the levy bump.
Employer Superannuation Contribution Tax (ESCT) brackets
| Income Range | New Tax Rate |
|---|---|
| $0 – $18,720 | 10.5% |
| $18,721 – $64,200 | 17.5% |
| $64,201 – $84,000 | 30% |
| $84,001 – $216,000 | 33% |
| $216,001 and above | 39% |
If you’re contributing to KiwiSaver or other retirement funds, this is worth noting. Make sure your system’s got these new brackets locked in.
Stability in student loans
For once, something’s staying the same. Student loan repayment rates and thresholds aren’t changing in 2025-2026 — one less thing to worry about.
New approach to final payment taxation
Here’s a change that could trip up a few businesses if they’re not watching closely.
Until now, final pays (including unused leave and bonuses when someone leaves) were taxed based on the employee’s last four weeks of earnings. Starting April 1, that’s changing to the last two pay periods in which the employee actually received pay.
Why? Because final payments often fall outside regular pay cycles. This update aims to tax those pays more fairly and accurately.
Here’s what to do:
- Confirm your payroll software has updated
- Review your final pay procedures
- Train your payroll team so no one’s caught out
- Document the process for future audits
Most modern software will auto-adjust for this. But double-checking now is easier than explaining a mistake later.
Preparing your business for the April changes
With all these updates hitting at once, it’s a smart move to get ahead of them. If you haven’t already, review your scheduled payroll activities especially if you’ve got automated payments running in the background.
Think of this as the perfect time to audit your setup. Manual systems are risky. Automated platforms (with features like direct debit and built-in compliance checks) can seriously reduce stress.
Here’s your quick-reference checklist:
April 2025 Payroll & tax update – Quick reference
| Area | Action Required |
|---|---|
| Minimum Wage | Manually update rates for applicable staff |
| ACC Earners’ Levy | Ensure system uses new rate (1.67%) |
| ESCT Brackets | Update tax brackets if not automatic |
| Final Payment Taxation | Verify calculation uses last 2 paid periods |
| Communication | Inform impacted employees of changes |
| Testing | Run trial payroll before April 1 |
Bonus stat:
A 2023 survey found 37% of NZ small businesses were caught off guard by payroll regulation changes. Don’t be one of them.
So get your system tuned up, talk to your team, and make sure everything’s good to go well before the deadline.
And hey, if this all feels like a lot (it is), don’t go it alone. At BH Accounting, we help connect business owners with the best payroll and tax professionals in New Zealand so you can keep things running smoothly without the stress.