Excel formula for calculating NZ tax paid on annual income.

gistfile1.txt

=IF(B2<=14000,SUM(B2*10.5%),IF(B2<=48000,SUM(B2-14000)*17.5%+1470,IF(B2<=70000,SUM(B2-48000)*30%+7420,IF(B2>=70001,SUM(B2-70000)*33%+14020))))

Thank you, CMac89 :)

Thanks for sharing this, and for the updates in the comments.

Here's another way of going about calculating annual income tax on a known income amount (A1) ...

=SUMPRODUCT(--(A1>={1;14000;48000;70000;180000}),(A1-{0;14001;48001;70001;180001}),{0.105;0.07;0.125;0.03;0.06})

In this case, A1 is the income total.

Thank you <3 This is even better.

I love this formula. But what this does not have future proofing from my point of view like the previous suggestions which include tax percentages in a table. I guess my comment comes from me not understanding the sumproduct formula and what would I change if the tax percentages changed - currently I do not have a clue.

Looking at
=SUMPRODUCT(--(F35>={1;14000;48000;70000;180000}),(F35-{0;14001;48001;70001;180001}),{0.105;0.07;0.125;0.03;0.06})

I suspect it is the third array which covers the tax percentages, but I cannot see how these are calculated. Any ideas?

I love this formula. But what this does not have future proofing from my point of view like the previous suggestions which include tax percentages in a table. I guess my comment comes from me not understanding the sumproduct formula and what would I change if the tax percentages changed - currently I do not have a clue.

Looking at =SUMPRODUCT(--(F35>={1;14000;48000;70000;180000}),(F35-{0;14001;48001;70001;180001}),{0.105;0.07;0.125;0.03;0.06})

I suspect it is the third array which covers the tax percentages, but I cannot see how these are calculated. Any ideas?

The third array contains the tax rates for the first income bracket and the incremental tax rates for each subsequent bracket.
The first tax rate in the third array is the tax rate for the first income bracket, which is 10.5%.

The second tax rate is the incremental tax rate for the second bracket, which is 7% (i.e., the difference between the tax rate for the second income bracket, which is 17.5%, and the tax rate for the first bracket, which is 10.5%).

The third tax rate is the incremental tax rate for the third bracket, which is 12.5% (i.e., the difference between the tax rate for the third income bracket, which is 30%, and the tax rate for the second bracket, which is 17.5%).

The fourth tax rate is the incremental tax rate for the fourth bracket, which is 3% (i.e., the difference between the tax rate for the fourth income bracket, which is 33%, and the tax rate for the third bracket, which is 30%).

The fifth tax rate is the incremental tax rate for the fifth income bracket, which is 6% (i.e., the difference between the tax rate for the fifth bracket, which is 39%, and the tax rate for the fourth bracket, which is 33%).

Knowing this, you should be able to adjust them accordingly, should the need arise.

Awesome! You are awesome. And I feel stupid - LOL - for not seeing the pattern. Thank you and have a great day.

A modified version of @inspiredearth's formula:
This includes ACC levy of 1.53% and 3% Kiwisaver.
=(($A1-SUMPRODUCT(--($A1>={1;14000;48000;70000;180000}),($A1-{0;14001;48001;70001;180001}),{0.105;0.07;0.125;0.03;0.06}))-($A1*(0.0153+0.03))

Hi all,
Just created a Google Sheet to help calculate the tax, also the ability to include deductions for Kiwisaver and ACC levy. You can add your custom values to the boxes in green.

https://docs.google.com/spreadsheets/d/1hPtxMEZgM4t4Z2_cyE-G05yDzwvaSKH_f3U48-s9B0o/edit?usp=sharing

Hi guys, thanks for this.

I found that the correct formula to calculate the edge case of exactly $14,000 etc needs to be as follows;

=SUMPRODUCT(--(A1>={0;14000;48000;70000;180000}),(A1-{0;14000;48000;70000;180000}),{0.105;0.07;0.125;0.03;0.06})

Thanks @LightspeedNZ, I've got an update for FY25 which tests out pretty well against IRD website based on:

From	To	Rate
0	$14,000.00	10.50%
$14,001.00	$15,600.00	12.82%
$15,601.00	$48,000.00	17.50%
$48,001.00	$53,500.00	21.64%
$53,501.00	$70,000.00	30.00%
$70,001.00	$78,100.00	30.99%
$78,101.00	$180,000.00	33.00%
$180,001 and over		39.00%

=SUMPRODUCT(--(A1>={0;14000;15600;48000;53500;70000;78100;180000}),(A1-{0;14000;15600;48000;53500;70000;78100;180000}),{0.105;0.0232;0.0468;0.0414;0.0836;0.0099;0.0201;0.06})

From 1st April 2025 with the following tax rates:

From	To	Rate
0	$15,600.00	10.50%
$15,601.00	$53,500.00	17.50%
$53,501.00	$78,100.00	30.00%
$78,101.00	$180,000.00	33.00%
$180,001 and over		39.00%

Gives the following formula (untested):

=SUMPRODUCT(--(A1>={0;15600;53500;78100;180000}),(A1-{0;15600;53500;78100;180000}),{0.105;0.07;0.125;0.03;0.06})

Here's a slightly simpler version to prevent the problem mentioned by @LightspeedNZ:

=SUMPRODUCT((A1>{1;14000;48000;70000;180000})*(A1-{0;14000;48000;70000;180000}),{0.105;0.07;0.125;0.03;0.06})

Lambda limits you to one cell reference, which is a time saver:
=LAMBDA(x,SUMPRODUCT((x>{1;14000;48000;70000;180000})*(x-{0;14000;48000;70000;180000}),{0.105;0.07;0.125;0.03;0.06}))(A1)

Just to add that most PAYE calculators online are incorrectly using the formula for 1st April 2025 already. If you are calculating PAYE or total tax you may need to include the ACC Earners Levy of $2,276.53 pa.