EOFY 2026 Payroll Update: What employers need to know

From 1 April 2026, several payroll updates come into effect. The good news? If you’re using PayHero, most of the heavy lifting is taken care of.

Here’s what you need to know and what (if anything) you need to do.

KiwiSaver contribution increasing

From 1 April 2026, the minimum KiwiSaver contribution rate increases from 3% to 3.5% for both employees and employers.

Employees can apply to Inland Revenue from 1 February 2026 for a temporary reduction to remain at 3%. This:

• Can be approved for 3-12 months

• Must be confirmed by IRD before applying

• Is not available if the employee has a savings suspension in place

What employers need to do

• You must contribute at least 3.5% from the first applicable pay period

• Budget for the slightly higher employer contribution

• Only apply a 3% rate where IRD approval has been provided

Using PayHero? We’ll automatically update the default 3% rate to 3.5% for both employer and employee contributions. No action is required unless an employee provides IRD approval for a temporary 3% rate.

If they do, simply select the 3% (Exemption) option in their KiwiSaver settings: People > Employees > Employment details

Adding new employees before 1 April? Select the current 3% KiwiSaver rate when setting them up and PayHero will automatically update it to 3.5% once the new rate takes effect.

If you use a salary sacrifice arrangement, the new 3.5% rate will automatically apply where the previous default was selected.

Employer contributions for 16–17 year olds

From 1 April 2026, employer KiwiSaver contributions will also apply to employees aged 16 and 17 who are enrolled in KiwiSaver.

What employers need to do

• Review employees’ Date of Birth and KiwiSaver details

• Identify any 16 or 17 year olds who are enrolled in KiwiSaver

• Ensure you contribute at least 3.5% from the first pay period starting on or after 1 April 2026

Using PayHero? Simply update the Employer Contribution Rate from 0% to 3.5% for affected employees. Once set up correctly, contributions will be calculated automatically from your first April pay run.

ACC Earners’ Levy rate increase

The ACC Earners’ Levy increases from 1.67% to 1.75%, with the income threshold moving to $156,641 (up from $152,790).

Using PayHero? We’ll apply this automatically. You may notice a small reduction in employees’ take-home pay as a result.

Minimum wage rates are rising

The minimum wage rates are getting a bump:

• Adult minimum wage: from $23.50 to $23.95 per hour

• Training and Starting-Out wage: from $18.80 to $19.16 per hour

What employers need to do

If you employ staff on (or near) minimum wage, ensure the new rate applies from the first pay period starting on or after 1 April 2026.

That means:

• Reviewing affected employees

• Updating their hourly rate (or salary equivalent)

• Ensuring pay periods that cross 1 April 2026 are handled correctly

• Letting employees know about the change

Using PayHero? Updating pay rates in PayHero is straightforward.

There are two approaches, depending on whether or not they are recording timesheets in PayHero. You can view the full step-by-step guide on updating pay rates here: Changing Pay Rates

If you’re using PayHero’s Minimum Wage Top Up feature, it will automatically factor in the minimum wage increase.

Managing a large team? If you have a high volume of minimum wage staff, we can help update rates in bulk. Contact us at support@payhero.co.nz.

No Changes to Student Loans or ESCT

Great news! There are no changes to student loan repayment rates or thresholds, or to Employer Superannuation Contribution Tax (ESCT) rates or thresholds.

There’s nothing you need to adjust here. The updated thresholds introduced from 1 April 2025 will continue to apply for the 2026/27 tax year.

Don’t forget your payments!

With these changes, it’s a good opportunity to double-check and update any automatic payments you’ve set up for payroll.

Better yet, why not get PayHero to manage employee and tax payments for you? It’s easy to switch to our direct debit or bank transfer payment methods.

What you need to do

For most PayHero customers, there’s very little to action:

• Update minimum wage rates

• Review payroll budgets for KiwiSaver changes

• Apply a 3% (Exemption) rate only where IRD approval is provided

• Start contributing KiwiSaver for enrolled 16–17 year olds

• Review automatic payroll or tax payments

• Communicate key changes to affected employees

We’ll handle the rest.

Want the full technical breakdown? You can read the detailed guide here: PayHero Tax Update FY2027

If you need a hand, our support team is here to help you move smoothly into the new tax year.