Budget 2024: Tax cuts explained - how much you'll get from the Government's relief package

The Government is ploughing ahead with the tax cuts promised by the National Party during its election campaign, the majority of which will be funded by off-setting savings made in the public sector.

Questions have been raised since the Government was sworn in as to how the relief would be funded, after a major revenue source - a proposed foreign buyers' tax - was killed off during Coalition negotiations between National and New Zealand First.

The $3.68 billion per year tax package - which is also made up of FamilyBoost, restoring interest deductibility for landlords and adjusting the brightline test - will now be funded through $1.22b in baseline savings not reprioritsed to frontline agencies; $775m from scrapping programmes introduced by the previous Government; $597m from the climate dividend; $578m from commercial buildings depreciation; $47m from slapping a tax on online casino operators; $133m in revenue from increasing immigration levies; $220m from replacing fees-free first-year tertiary study with final-year; and $147m from investment in Inland Revenue (IRD) tax audits and oversight.

"On July 31 this year, New Zealanders will experience tax relief for the first time in 14 years. This relief is well overdue and will help hardworking Kiwis who have endured a prolonged cost of living crisis," Finance Minister Nicola Willis said.

"The Government's tax package targets relief to low and middle-income households. Families with young children are set to benefit most.

"As agreed in the National-NZ First agreement, the Government is not progressing the foreign buyers' tax. Instead, we have increased funding for IRD tax audits and oversight work, generating extra revenue and ensuring greater fairness and integrity in our tax system."

How does this translate to what Kiwis will get in their back pockets?

Budget 2024: Tax cuts explained - how much you'll get from the Government's relief package

The relief is being achieved through the adjustment of tax brackets to inflation.

"Our Government will raise income tax thresholds to help compensate for wage growth, expand eligibility for the independent earner tax credit, introduce the FamilyBoost childcare payment and increase the in-work tax credit for low to middle-income working families," Willis said.

"This tax relief gives average income households up to $102 a fortnight plus FamilyBoost childcare payments of up to $150 per fortnight for eligible families.

"The changes to the in-work tax credit and FamilyBoost tilt the benefits of the tax package strongly to low-to-middle income working families with children."

Budget 2024: Tax cuts explained - how much you'll get from the Government's relief package

In a statement, Prime Minister Christopher Luxon said the Government was delivering "meaningful tax relief to support Kiwis with the cost of living".

"Too many Kiwis have gone backwards in recent years. Even as wages have struggled to keep pace with inflation, Kiwis have been dragged into higher and higher tax brackets.

"Budget 2024 delivers the tax relief we promised.

"The tax package in Budget 2024 is fully funded from savings and other revenue measures - meaning it will not add to debt and inflation. But it will allow hard-working New Zealanders to keep more of what they earn."

You can find the tax calculator here.