Everything changes on April 1, 2026. Prepare for the $23.95 minimum wage and the new 3.5% KiwiSaver rate.
3.5% KiwiSaver Employer Rate
1. The Big Shift: What Happens on April 1, 2026?
As the 2025/2026 tax year comes to a close on March 31, New Zealanders are bracing for a significant financial reset. The government has confirmed a 2% increase in the adult minimum wage, alongside major adjustments to KiwiSaver and ACC levies. These changes are not automatic for everyone; payroll systems must be updated immediately to avoid penalties.
Readers of this guide also explored this essential topic.
NZ Minimum Wage 2026 Forecast: New Rates Starting April 1
π Quick Summary: Key Changes
Effective Date: Wednesday, 1 April 2026.
New Minimum Wage: Adults rise to $23.95/hr. Starting-out/Training wages rise to $19.16/hr.
KiwiSaver Hike: Employer and default employee contribution rates increase from 3% to 3.5%.
ACC Earners’ Levy: Increases to $1.75 per $100 (1.75%), slightly reducing net take-home pay.
Whether you are an employer finalising the year-end payroll or an employee budgeting for the year ahead, understanding these figures is crucial. The increase in the ACC levy means that while your gross pay goes up, your “in-hand” money might not rise as much as you expect.
2. Who Gets the Raise? Detailed Eligibility
Not every worker is eligible for the full $23.95 rate. It is vital to classify employees correctly to ensure compliance with the Employment Relations Act.
Applies to all employees aged 16 and over who do not fall into the starting-out or training categories.
For 16-19 year olds entering the workforce for the first time (first 6 months of employment with a new employer).
Applies to employees aged 20+ who are completing an industry training programme involving at least 60 credits a year.
Starting April 1, 2026, employers MUST pay KiwiSaver contributions (3.5%) for eligible 16 and 17-year-old employees. Previously, this was only mandatory for 18+.
3. Action Plan: Updating Payroll & Payments
The transition from the 2025 tax year to the 2026 tax year requires manual intervention. Do not assume your software will handle everything automatically.
For Employers:
- Step 1: Update payroll software to reflect the new ACC Levy rate of 1.75%.
- Step 2: Adjust the KiwiSaver employer contribution from 3% to 3.5%.
- Step 3: File the final IR-File for March 2026 by April 20th.
For Employees:
- Step 1: Check your first payslip in April. Is the hourly rate $23.95?
- Step 2: Verify your KiwiSaver deduction. You will see a slight increase in deductions.
- Step 3: If you have automatic payments set up for rent/bills, update them now that your income has changed.
4. The Money: Calculate Your New Weekly Pay
How much extra cash will you actually see? Let’s break down the gross vs. net impact, considering the higher tax levy.
π° Pay Rise Estimator (40 Hours/Week)
Note on ACC: The ACC Earner’s Levy rises to $1.75 per $100.
On $958 gross, you will pay approx $16.76 in ACC levy weekly (up from the previous year).
| Category | 2025 Rate | 2026 New Rate |
|---|---|---|
| Min Wage (Adult) | $23.50 | $23.95 |
| ACC Levy | 1.60% (approx) | 1.75% |
| KiwiSaver (Employer) | 3.0% | 3.5% |
5. “Hidden” Mistakes to Avoid in April
The April 1st crossover period is notorious for payroll errors. Small mistakes now can lead to large tax bills (Terminal Tax) next year.
β οΈ The “Pay Period” Trap
If your pay period spans across March 31 and April 1 (e.g., you work March 25 – April 7), which rate applies?
The Rule: Any hours worked on or after April 1 must be paid at the new rate ($23.95). Hours worked in March are paid at the old rate ($23.50). You cannot simply apply one rate to the whole fortnight if it splits the deadline.
Holiday Pay Error: If an employee takes annual leave in April, their “Ordinary Weekly Pay” must be recalculated using the new higher rate. Using the 52-week average alone might result in underpayment.
6. Verified Resources & Help
If you suspect you are being underpaid, or if you are a business owner struggling with the new KiwiSaver calculations, use these Verified government channels.
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