New Zealand tax rates compared to US is a question more and more people are asking, especially expats, remote workers, and business owners thinking globally. The answer? It’s not just about who pays more, but how the whole system works.
The US has federal, state, and sometimes local taxes. New Zealand, on the other hand, runs a simpler model with no state taxes, no capital gains tax in most cases, and a flat GST instead of a complex sales tax system. That alone is worth a closer look.
In this article, we’re diving deep into income tax rates, corporate taxes, GST vs sales tax, and how tax residency works in both countries. You’ll get the full picture—clear comparisons, real examples, and practical takeaways.
If you’re tired of skimming government sites and tax forums trying to piece it all together, this guide lays it out in one go. Simple, direct, and up-to-date. Because understanding how US vs NZ income tax stacks up could save you thousands or help you make the right move.
Overview of tax systems in New Zealand and the US
Before comparing actual tax rates, it’s helpful to understand how each country structures its system. The New Zealand tax system is centralized, with no state-level taxes. In contrast, the US tax system includes federal, state, and sometimes even city taxes, making it more complex for individuals and businesses alike.
Income tax structure in New Zealand
In New Zealand, income tax is based on a progressive rate system. The Inland Revenue Department (IRD) handles all tax collection and enforcement, and most people only deal with the central government.
- There are no local or state taxes.
- Most employees have taxes automatically deducted (PAYE).
You can learn more about how this system affects expats on our page about moving overseas tax advice.
Federal and state income tax in the US
The US tax system is layered. You pay federal income tax no matter where you live, and most states add their own income tax on top.
- Some states have no income tax (like Texas or Florida).
- Others, like California or New York, have high state taxes in addition to federal rates.
This multi-layered system means your total tax bill can vary a lot depending on where you live.
Income tax rates: New Zealand vs USA
Let’s dive into the numbers. Both countries use progressive tax brackets, but the thresholds and percentages differ quite a bit. Knowing how your income will be taxed in either country can help you plan better, especially if you’re considering a move.
Bullet point highlights
- In New Zealand, the top marginal tax rate is 39% (applies to income over NZD $180,000).
- In the US, the top federal tax rate is 37% (applies to income over USD $578,125 for single filers in 2025).
Below is a simplified comparison of tax brackets for single individuals:
| Income Level | New Zealand (NZD) | Tax Rate NZ | United States (USD) | Tax Rate US |
|---|---|---|---|---|
| Up to $15,600 | 0 – 15,600 | 10.5% | Up to $11,600 | 10% |
| $15,601 – $53,500 | 15,601 – 53,500 | 17.5% | $11,601 – $47,150 | 12% |
| $53,501 – $78,100 | 53,501 – 78,100 | 30% | $47,151 – $100,525 | 22% |
| $78,101 – $180,000 | 78,101 – 180,000 | 33% | $100,526 – $191,950 | 24–32% |
| Over $180,000 | 180,001 and above | 39% | Over $609,350 | 37% |
Note: Currency units are local (NZD for New Zealand, USD for United States). US brackets do not include state taxes.
Corporate and business taxes: Which is more favorable?
For entrepreneurs, choosing where to run your business has serious tax implications. Let’s look at corporate tax rates and business deductions in New Zealand and the US.
Company tax rates in New Zealand
New Zealand has a flat 28% corporate tax rate. There’s no lower small business rate, but the process is straightforward.
- No capital gains tax (with exceptions)
- Simplified deductions and less red tape
This makes NZ appealing for small business owners and contractors. If you’re starting a business while moving overseas, it’s worth evaluating the long-term tax cost.
Corporate tax rates in the US and deductions
The US currently has a flat federal corporate tax rate of 21%, but the effective rate can vary.
- Additional state taxes may apply (0% to 12%)
- More deductions and credits are available, but rules are complex
Some businesses benefit from these deductions, while others find the compliance costs outweigh the savings.
Which country is better for startups and SMEs?
If you value simplicity and predictability, NZ wins. If you’re seeking aggressive deductions and tax credits (like R&D), the US may be better. But keep in mind that NZ’s system can be more flexible for non-residents or those operating from abroad. You can read more on non-resident for tax purposes in NZ.
IMAGE: Side-by-side chart showing startup compliance costs in NZ vs US
Sales tax vs GST: What’s the difference?
Indirect taxes can also impact your daily costs and your business pricing. The US and NZ have very different systems here.
How GST works in New Zealand
New Zealand applies a flat 15% GST on nearly all goods and services.
- No exemptions for food or clothing
- GST is included in most prices
- Businesses file GST returns every 2 or 6 months
If you plan to do business here, our GST expenses and claims guide can help.
How sales tax varies in the US
The US has no federal sales tax. Instead, sales tax is managed at the state level.
- Rates range from 0% to over 10%
- Some states tax groceries, others don’t
- Businesses must register in each state they operate in
This patchwork system makes compliance tricky, especially for online sellers.
Tax residency and filing obligations
Understanding tax residency rules is key, especially if you live or earn income in more than one country. Let’s look at how each system determines who pays what.
Becoming a tax resident in New Zealand
You become a tax resident in NZ if:
- You spend more than 183 days in a 12-month period, or
- You establish a “permanent place of abode”
Once resident, you’re taxed on worldwide income. Details here: non-resident tax advice NZ
US tax filing for citizens abroad and dual residents
US citizens and green card holders must file taxes no matter where they live.
- You can claim the foreign earned income exclusion (up to $120,000)
- You may still owe US taxes, depending on your situation
If you’re unsure, our overseas tax advice can help you get clarity.
IMAGE: Decision tree: Are you a tax resident in NZ or the US?
Bonus for new zealand tax rates compared to us
Let’s break down a few real-world examples to show how much you’d take home in each country at different income levels.
TABLE: Net annual income comparison after tax (2025)
| Gross Income | NZ Net Income (NZD) | US Net Income (USD, federal only) |
|---|---|---|
| $50,000 | ~$41,000 | ~$42,500 |
| $100,000 | ~$72,000 | ~$74,000 |
| $200,000 | ~$129,000 | ~$131,000 |
These figures are simplified and do not include state tax in the US or tax credits in either country. If you want help with your specific situation, feel free to contact us.
IMAGE: Bar chart comparing net incomes side by side
Conclusion
Understanding how New Zealand tax rates compare to US tax rates gives you a clear advantage, whether you’re planning a move, running a business, or simply curious about international tax systems. While the US offers more deductions and tax credits, it also comes with complexity and state-level variations. New Zealand’s system is simpler, with no state taxes and clear income tax brackets.
From GST vs sales tax to corporate income tax and tax residency rules, each country has benefits depending on your situation. Your best choice depends on your income, location, and long-term goals.
If you want tailored advice before making a move or managing overseas income, feel free to contact us. We’re here to help you make the smartest financial decisions.
FAQ about new zealand tax rates compared to us
Which country has lower income tax overall?
It depends on your income level and where you live in the US. Generally, middle-income earners may pay slightly less in the US if they live in a low-tax state.
Do expats pay taxes in both countries?
US citizens often do. NZ generally does not double-tax if you’re non-resident. Check your residency status carefully.
Is it easier to file taxes in New Zealand?
Yes. NZ’s system is more automated and streamlined, especially for employees and small business owners.
Are business taxes higher in the US?
Not necessarily. The US has more deductions and credits, but the rules are complex and depend on your location and industry.
How does GST compare to US sales tax?
GST is simpler and more predictable. US sales tax varies by state and requires more admin for businesses.
Disclaimer
This article is for information only—not legal, financial, or tax advice. Every business is different, and rules change, so don’t make major decisions based on what you read here. If you’re unsure, talk to a professional—it’s cheaper than fixing a costly mistake later.