Quantifying Bracket Creep in New Zealand’s Personal Income Tax, 2011–2024

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.