What effective tax rate should NZ sole traders expect?

Your effective tax rate is the average rate you pay across all your income — lower than your marginal rate because lower income bands are taxed at lower rates. **Approximate effective tax rates for NZ sole traders (2024/25, income tax only):** | Net Profit | Income Tax | ACC Levy | Total | Effective Rate | |---|---|---|---|---| | NZ$30,000 | NZ$3,820 | NZ$480 | NZ$4,300 | 14.3% | | NZ$50,000 | NZ$8,020 | NZ$800 | NZ$8,820 | 17.6% | | NZ$70,000 | NZ$14,020 | NZ$1,120 | NZ$15,140 | 21.6% | | NZ$100,000 | NZ$23,920 | NZ$1,600 | NZ$25,520 | 25.5% | | NZ$150,000 | NZ$40,420 | NZ$2,230 | NZ$42,650 | 28.4% | As a rule of thumb, setting aside 25-35% of your net income for tax (including ACC) is sensible for most NZ sole traders. At lower incomes, 25% may suffice; at higher incomes, 33-35% is safer.

• Effective rate is lower than marginal rate due to progressive bands
• Range: approximately 14% at NZ$30k to 28%+ at NZ$150k
• Include ACC levy in your set-aside calculations
• Rule of thumb: set aside 25-35% of net income
• Higher earners should set aside closer to 35%