Payroll changes coming into effect from 1 April 2026

From 1 April 2026, several payroll compliance updates will come into effect for New Zealand businesses. These include changes to KiwiSaver contribution rates, ACC earner’s levy adjustments, and a Minimum wage increase.

Here’s a clear overview of what’s changing and what to keep an eye on.

Kiwisaver Contribution Rate:

Kiwisaver Minimum Contribution Increase

The default minimum KiwiSaver contribution rate for both employees and employers will increase from 3% to 3.5%, and employees aged 16-17 will become eligible for the 3.5% employer contribution.

From 1 April 2026:

• Employees currently contributing 3% will need to move to 3.5%

• Employer contributions set between 3% and 3.5% will need to increase to 3.5%

• New employees enrolled in KiwiSaver will default to 3.5% minimum contributions

• Employees aged 16-17 who are enrolled in KiwiSaver will become eligible for 3.5% compulsory employer contributions.

Find out more here.

Updating Kiwisaver in Xero

Xero will release a bulk update tool in March so you can update employee KiwiSaver contribution rates before the April 1st change.

You’ll be able to access the tool from the employee list screen to:

• View all employee KiwiSaver details in one place

• If you want them to be updated, select employees whose default rates need to be updated to 3.5%, with one button

• Identify employees who need manual updates via their profile

Because the updated rates apply to any new or reset draft pay runs, you'll need to choose the best time to run the update for your business.

Situations Where You May Need to Make Manual Changes

There may be some situations where a manual change will be required.

Processing a Pay for the Previous Financial Year:

If you process a pay after 1 April 2026, but the pay period relates to the 2025–26 financial year, you will need to:

1. Temporarily change the employee’s KiwiSaver rate back to 3%

2. Process the pay

3. Change the rate back to 3.5% afterwards

Temporary KiwiSaver Rate Reduction:

From 1 February 2026, employees can apply to Inland Revenue for a temporary KiwiSaver contribution reduction from 3.5% to 3%, effective 1 April 2026.

Key things to know:

• The reduction can be approved for 3 to 12 months

• Employees must reapply if they want the reduction extended

• Employers can also temporarily reduce their contribution to match the 3% if they choose

It’s important to record and monitor the expiry date for any temporary reductions.

Find out more about the temporary rate reductions here.

ACC Earner’s Levy Changes:

The ACC earner’s levy rate will increase for the new tax year.

	2025-26 Tax Year	2026-27 Tax Year
ACC Earner Levy Rate	1.67%	1.75%
ACC income Maximum	$152,790	$156,641

Most payroll systems will automatically apply the new ACC rates to pay runs where the date of payment is 1 April 2026 or later.

Read about the ACC Earner's levy changes here.

Minimum Wage Increase:

From 1 April 2026, the adult minimum wage will increase to $23.95 per hour, up from the current rate of $23.50

The training and starting-out minimum wages will also increase to $19.16 per hour, which remains 80% of the adult minimum wage. This is an increase from the current rate of $18.80 per hour.

Read more about the minimum wage increase here.

If you would like any assistance updating your employees or would like to find out more, get in touch.