Quantifying Bracket Creep in New Zealand’s Personal Income Tax, 2011–2024
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Gemmell, Norman
Skov, Peer Ebbesen
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Informa UK Limited
Abstract
New Zealand’s main personal income tax thresholds were unchanged from October 2010 until July 2024, while consumer prices rose substantially. This note uses annual IRD taxable-income tabulations, calibrated to actual PIT collections, to estimate the revenue effect of this non-indexation. Relative to a CPI-indexed counterfactual, frozen thresholds generated an estimated nominal 5.8 billion dollars in additional PIT revenue in FY2024 and an undiscounted nominal total of 23.5 billion dollars over FY2011–FY2024. As a share of income, the burden peaks for middle earners and declines above the third indexed threshold.
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38 Economics, 3802 Econometrics, 1401 Economic Theory, 1402 Applied Economics, 1499 Other Economics, 3502 Banking, finance and investment, 3801 Applied economics, Bracket creep, personal income tax, fiscal drag, New Zealand
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New Zealand Economic Papers, ISSN: 0077-9954 (Print); 1943-4863 (Online), Informa UK Limited, 1-9. doi: 10.1080/00779954.2026.2737626
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© 2026 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article.
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Except where otherwise noted, this item's license is described as Creative Commons Attribution License