Short version: most New Zealand companies pay 28% tax on their profit. It's a flat rate. Every dollar of profit is taxed the same, unlike personal income tax, which rises in steps.
Business tax rates at a glance
| Who pays | Rate |
|---|---|
| Most companies | 28% |
| Māori authorities | 17.5% |
| Trustees | 39% (33% if trust income is $10,000 or less) |
| Sole traders (self-employed) | Individual rates, 10.5% to 39% |
| PIE investors (resident individuals) | 10.5%, 17.5% or 28% |
Individual rates, for comparison
If you're a sole trader, your business profit is your personal income. It's taxed at the individual rates for 2026–27:
| Income | Rate |
|---|---|
| $0 – $15,600 | 10.5% |
| $15,601 – $53,500 | 17.5% |
| $53,501 – $78,100 | 30% |
| $78,101 – $180,000 | 33% |
| Over $180,000 | 39% |
Each rate only applies to the slice of income inside its bracket. The company rate has no slices. It's 28% from the first dollar.
Worked example: $100,000 of profit
Say a business makes $100,000 of profit in a year. Here's the income tax each way, on the profit alone.
| Sole trader | Company | |
|---|---|---|
| How it's worked out | $1,638 + $6,632.50 + $7,380 + $7,227 (the four bracket slices) | $100,000 × 28% |
| Income tax | $22,877.50 | $28,000 |
| Share of profit | 22.9% | 28% |
For the sole trader, that's 10.5% on the first $15,600, 17.5% on the next $37,900, 30% on the next $24,600 and 33% on the last $21,900.
At this level of profit, the sole trader pays less income tax. That's because the first $53,500 is taxed at 17.5% or less. Above $78,100, though, each extra dollar is taxed at 33% for the sole trader, more than the company's 28%.
The two numbers aren't a full comparison. The company's $72,000 after tax belongs to the company, not to you. To get it into your own pocket, the company has to pay it out to you, for example as a dividend. A dividend is taxed as your income, with credit for the tax the company already paid (see below).
ACC levies are also worked out differently for sole traders and companies. They're left out of this example.
Dividends and imputation credits
When a company pays a dividend, the dividend counts as income for the shareholder. That could mean tax twice on the same profit. Imputation stops that.
- The company keeps track of the income tax it has paid.
- It can attach that tax to dividends as imputation credits, up to 28 cents of credit for each $1 of gross dividend.
- The shareholder includes the dividend in their income, and the credits reduce the tax they pay personally.
Inland Revenue puts it simply: this means company profits are not taxed twice.
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Trusts
Income kept in a trust is taxed at the trustee rate of 39%, from 1 April 2024. If the trust's income is $10,000 or less, the rate is 33%.
Māori authorities
Māori authorities pay 17.5%.
PIEs
Portfolio investment entities (PIEs) tax your investment income at your prescribed investor rate (PIR). For NZ resident individuals that's 10.5%, 17.5% or 28%. If you don't give your provider a rate, they use 28%.
Common questions
What is the company tax rate in NZ?
28% of taxable profit for most companies. It's the same rate on every dollar of profit.
Do companies pay less tax than sole traders?
Not always. On $100,000 of profit, a sole trader pays $22,877.50 of income tax and a company pays $28,000. The answer changes with the amount of profit and how the money is paid out to you.
Are dividends taxed?
Yes, dividends are income for the shareholder. Imputation credits attached to the dividend reduce the shareholder's own tax, to reflect tax the company has already paid.
Should I set up a company?
It depends on your profit, what you plan to do with it, and much more than tax. Talk to an accountant for your situation.
This page compares tax rates only. Whether a company suits you depends on things a rate table can't show. Talk to an accountant for your situation.
Sources: Inland Revenue, Tax rates for businesses, Trustee tax rates, Tax codes for individuals, Prescribed investor rates, Imputation for companies and How imputation credits work. Checked October 2026. General information, not tax advice.