The 1st of April marks the start of a new tax year in New Zealand, and with it comes a set of mandatory payroll changes that every employer must apply correctly and on time. From a higher minimum wage to increased KiwiSaver contribution rates and a revised ACC earner levy, these updates affect virtually every New Zealand payroll – regardless of the size of your business.
Getting these changes wrong is not simply an administrative oversight. It can result in underpayments to employees, incorrect tax deductions, penalties from Inland Revenue, and potential liability under the Employment Relations Act 2000. This post outlines each change clearly, explains what you need to do, and highlights where errors are most likely to occur.
The April 2026 Changes at a Glance
Here is a summary of the key changes effective from 1 April 2026:
| Rate / Threshold | Previous | From 1 April 2026 |
|---|---|---|
| Minimum Wage (adult) | $23.50 per hour | $23.95 per hour |
| KiwiSaver Employee Default Rate | 3.0% | 3.5% |
| KiwiSaver Employer Default Rate | 3.0% | 3.5% |
| ACC Earner Levy Rate | $1.67 per $100 | $1.75 per $100 |
| ACC Earner Levy Threshold | $152,790 | $156,641 |
Sources: New Zealand Government; Inland Revenue Department; ACC
Each of these changes carries its own compliance obligations. We cover them individually below.
Minimum Wage Increases to $23.95 per Hour
The adult minimum wage has increased from $23.50 to $23.95 per hour – a rise of 45 cents. While this may appear modest, the compliance implications are more significant than the figure alone suggests.
Under the Minimum Wage Act 1983, employers are required to pay at least the minimum wage to all employees covered by the Act. Failure to do so constitutes a breach, and employees are entitled to recover any shortfall, potentially with interest.
Who is most affected?
Employers who pay at or close to the previous minimum wage must review every affected employee’s pay rate and update it before the first pay period that falls on or after 1 April 2026. This applies regardless of whether an employee is paid hourly, is salaried, works part-time, or is on a fixed-term agreement.
The hidden compliance trap
Many employers assume the minimum wage is simply a matter of checking the hourly rate on a payslip. The reality is more complex – particularly for salaried employees whose effective hourly rate, once ordinary hours are divided into the salary, may fall below the new minimum. This can occur where employees regularly work hours beyond their contracted hours, or where salary arrangements have not been reviewed for some time.
It is also worth noting that under the Holidays Act 2003, the minimum wage rate forms part of the baseline for calculating leave entitlements, including annual leave paid at the higher of Ordinary Weekly Pay or Average Weekly Earnings. An underpayment at the minimum wage level can therefore cascade into incorrect leave calculations – a risk that is easily overlooked.
Employers with employees earning between $23.50 and $23.95 should treat the transition to the new rate as an opportunity to audit related pay rates and leave calculations.
KiwiSaver Default Contribution Rates Increase to 3.5%
From 1 April 2026, the default KiwiSaver contribution rate for both employees and employers has increased from 3.0% to 3.5%. This is a significant change that affects the majority of KiwiSaver members who have not elected a different contribution rate.
Under the KiwiSaver Act 2006, employers are obligated to deduct KiwiSaver contributions from employees’ wages and make matching employer contributions. The new default rate of 3.5% applies automatically to employees who have not chosen an alternative rate of 4%, 6%, 8%, or 10%.
What this means in practice
For many employees, the change will occur automatically. However, employers should be aware of the following:
- Employees who currently contribute at 3.0% will automatically move to 3.5% unless they have submitted a KiwiSaver deduction form (KS2) selecting a different rate.
- Employer contributions must also increase to 3.5% unless an employee has a valid opt-out or is on a contributions holiday (savings suspension).
- Employees who wish to remain at a lower rate will need to submit a new KS2 form to their employer requesting a specific percentage.
The employer contribution increase is a direct cost to the business and should be factored into wage budgets, employment agreements, and any remuneration reviews currently underway.
Remuneration packages and total cost of employment
Where employment agreements express remuneration as a “total cost of employment” or “total remuneration” package that includes employer KiwiSaver contributions, a 3.5% employer contribution rate will effectively reduce the take-home pay component of the package unless the total is renegotiated. Employers in this situation should seek advice and communicate clearly with affected employees before the change takes effect.
For guidance on KiwiSaver employer obligations, the Inland Revenue website provides detailed information at ird.govt.nz.
See also: https://paymasters.co.nz/blog/april-2026-minimum-wage-kiwisaver-payroll-changes-nz/
ACC Earner Levy Rate Increases to $1.75 per $100
The ACC earner levy is a compulsory deduction from employee earnings that funds the ACC earner’s account – providing cover for personal injuries that occur outside of work. From 1 April 2026, the rate increases from $1.67 to $1.75 per $100 of liable earnings.
The maximum liable earnings threshold has also increased from $152,790 to $156,641. This means the maximum ACC earner levy payable by any individual employee in the 2026 – 27 tax year is $2,741.22 (being $156,641 × 1.75%).
Who this affects
The ACC earner levy applies to all employees earning liable income, which includes salary, wages, and most other employment income. It does not apply to income above the maximum threshold, meaning employees earning above $156,641 will reach their maximum levy earlier in the year than under the previous threshold.
Employers must ensure their payroll systems apply the correct rate and threshold from the first pay period on or after 1 April 2026. Applying the old rate ($1.67) after this date will result in an undercollection of the levy, creating a discrepancy that must be remedied and reported to Inland Revenue.
For further information, the ACC website provides current levy rates at acc.co.nz.
Updated PAYE Tax Rates
In addition to the above changes, Inland Revenue has updated the PAYE tax rates tables that apply from 1 April 2026. Employers must ensure their payroll systems are using the correct updated tables when calculating PAYE deductions.
Under the Tax Administration Act 1994, employers are responsible for deducting the correct amount of PAYE from employees’ wages and remitting these to Inland Revenue on time. Incorrect PAYE deductions – whether under or over – create compliance issues that affect both the employer and the employee.
If you use a payroll software system, you should confirm with your provider that the new tax tables have been loaded and are active from 1 April. Do not assume this has occurred automatically without verification.
The Compounding Risk – When Multiple Changes Interact
What makes the April 2026 changes particularly challenging from a compliance perspective is not any single update in isolation – it is the way they interact with each other and with existing obligations under New Zealand employment law.
Consider an employee who:
- Was earning the previous minimum wage of $23.50 per hour
- Was contributing at the default KiwiSaver rate of 3.0%
- Had no other pay rate adjustments
From 1 April 2026, that employee’s pay rate must increase to $23.95, their KiwiSaver deduction increases to 3.5%, the employer’s KiwiSaver contribution increases to 3.5%, and the ACC earner levy increases to $1.75 per $100. Each of these changes must be applied correctly and simultaneously across the first applicable pay period.
If any one element is missed – particularly in a manual or partially automated payroll process – the payslip will be wrong. The employee may be underpaid, undertaxed, or incorrectly documented. Multiply this across a workforce of any meaningful size, and the risk of non-compliance compounds quickly.
Why Payroll Software Alone Is Not Enough
A common misconception among New Zealand employers is that using payroll software guarantees compliance. It does not.
Software applies the rules you programme into it. If rate tables are not updated, if the correct start date is not applied, or if the software does not automatically handle KiwiSaver rate transitions, the output will be wrong – regardless of how reputable the software is.
Furthermore, payroll software does not interpret the law. It does not assess whether an employee’s total remuneration package remains compliant after the minimum wage increase, nor does it flag where a salaried employee’s effective hourly rate may now be below the statutory minimum.
Compliance under New Zealand employment legislation requires informed human judgement, not just software automation.
How Paymasters Can Help
At Paymasters, we specialise in New Zealand payroll compliance. As a recognised Professional Group with Inland Revenue, we stay across every legislative change – including the April 2026 updates covered in this post – and apply them accurately to our clients’ payrolls from the correct effective date.
Our team understands the Holidays Act 2003, the Employment Relations Act 2000, the KiwiSaver Act 2006, and the full range of Inland Revenue obligations that govern New Zealand payrolls. We do not simply process numbers – we apply the law correctly.
If you are managing payroll in-house and are uncertain whether the April 2026 changes have been correctly applied, now is the right time to have a conversation with a payroll professional.
If you have any concerns about whether your payroll is compliant, or you would simply like to understand your obligations more clearly, contact us for a confidential discussion.
Key Dates and Action Points
Before 1 April 2026 – or immediately if you are reading this after the date:
- Review all employee pay rates and update any that are at or below $23.95 per hour
- Confirm KiwiSaver contribution rates and update those currently at 3.0% to 3.5%
- Verify ACC earner levy settings reflect the new rate of $1.75 per $100 and threshold of $156,641
- Confirm updated PAYE tax tables are active in your payroll system
- Review any “total cost of employment” packages that include employer KiwiSaver contributions
- Communicate relevant changes to affected employees
Further Reading and Sources
- New Zealand Legislation – Minimum Wage Act 1983
- New Zealand Legislation – KiwiSaver Act 2006
- New Zealand Legislation – Holidays Act 2003
- Inland Revenue – KiwiSaver for Employers
- ACC – Levy Rates
- Employment New Zealand – Minimum Wage
Paymasters is a New Zealand payroll outsourcing company based in [location]. We are a recognised Inland Revenue Professional Group. This post is intended as general information only and does not constitute legal or accounting advice. For advice specific to your situation, contact us for a confidential discussion.