Tax rules for ESCT from 1 April 2025

Employer Superannuation Contribution Tax (ESCT) 

In the 2024 budget, the Government introduced changes to income ranges which may impact how much employers pay in employer’s superannuation contribution tax (ESCT) on the employer contribution into your superannuation and /or KiwiSaver account. These changes will apply from 1 April 2025.

If your income falls between these income ranges, you may be impacted by the change which applies to superannuation and KiwiSaver contributions made by an employer:

Between $16,800 and $18,720

Between $57,600 and $64,200

Between $84,000 and $93,720

ESCT is not applied in the same tiered way as personal income tax rates and only one rate applies to the total amount of the employer contribution. 

For example: If your income was $85,000 a year your entire employer contribution was taxed at 33%. From 1 April 2025, your entire employer contribution is taxed at 30%.

What does this mean for you?

The level of employer contributions may change, as the amount you receive in your retirement savings account from 1 April 2025 may increase as a result of lower ESCT rate being applied.

The income thresholds and tax rates that are applied to employer contributions are:

Income range in the previous income* year (prior to 1 April 2025)

Income range in the previous income* year (from 1 April 2025)

ESCT rate

Up to $16,800

Up to $18,720

 10.5%

Between $16,801 and $57,600

Between $18,721 and $64,200

 17.5%

Between $57,601 and $84,000

 Between $64,201 and $93,720

 30%

Between $84,001 and $216,000

 Between $93,721 and $216,000

 33%

$216,001 and over

 $216,001 and over

 39%


* Annual salary or wages plus gross employer contributions paid to employee in previous tax year

Is there anything I need to do?

No, you do not need to tell Mercer what your correct ESCT rate is. Your employer will make the deductions before the amount is credited to your superannuation account. Your payslip should state the amount of ESCT and employer contributions made to your account.  

To find out how the changes may impact the value of your employer’s contributions please talk to your employer.

TIP: This is a great time to review your retirement savings strategy!  Make sure that contributions you are receiving into your retirement savings account are enough to fund your desired lifestyle during your retirement years.

The treatments described in this article are based on our understanding of New Zealand tax legislation as it applies to the Scheme. Tax legislation, its interpretation and the rates and bases of taxation are subject to change. The application of tax laws depends on a member’s individual circumstances. Members are advised to seek their own tax advice from a qualified tax adviser. This information has been prepared by Mercer (N.Z.) Limited for general information only. The information does not take into account your personal objectives, financial situation or needs.

04 March 2025