Setting the ESCT rate for the next tax year is a 1 April payroll activity.
This is an automated system activity in some payroll systems, whereas in others, it must be done manually (why are you paying for a payroll system?).
Whatever method is used, payroll needs to understand how ESCT is set fully.
The ESCT Rates to be used:
| CURRENT ESCT threshold amount (1 April 2024 – 31 March 2025) | NEW ESCT threshold amount (1st April 2025 – 31 March 2026) | Tax rate |
|---|---|---|
| $1 – $16,800 | $0 – $18,720 | 10.5% |
| $16,801 – $57,000 | $18,721 – $64,200 | 17.5% |
| $57,001 – $84,000 | $64,201 – $93,720 | 30% |
| $84,001 – $216,000 | $93,721 – $216,000 | 33% |
| $216,001 upwards | $216,001 upwards | 39% |
Notes on ESCT:
- You can apply ESCT at the flat rate of 39% if paying into a defined benefit fund.
- ESCT is calculated on whole dollars and deducted from the gross employer contribution. Deductions are paid to IRD at the same time you make your employer contribution to the fund.