Discover how individual tax rates in New Zealand affect sole traders, where income is taxed progressively, with a top rate of 33% for earnings over $70,000. Learn how your side hustle income combines with your full-time job earnings and gets taxed differently. Get insights on finding tax rates for each dollar of income and make informed financial decisions.
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“What happens if I am working and say I earn 75k (so in the 33% tax bracket) and then I start a business as a sole trader and earn 15k from the side hustle. Is all the sole trader income taxed at 33% as well? or is the side hustle income completely separate when it comes to tax time.
Because I would assume if you made only a loss from your sole trader business I assume you can’t claim the loss against your primary income?
Have looked around but struggling to find information on it. Thanks in advance!”
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In short, your sole trader income will also be taxed at 33%.
As a sole trader in New Zealand, you are subject to individual tax rates. These rates are progressive, which means they increase as your income increases. The top personal tax rate as of Nov 2023 is 33% for income over $70,000.
When you start a business as a sole trader, the income you earn from it is considered part of your total income for the year. Therefore, if you earn $75k from your full-time job and $15k from your side hustle, your total income for the year would be $90k. You would be taxed at appropriate rates for each portion of your income. You can go on the IRD website to find the different tax rates for each dollar of income.
Hope this helps.
Regards, Clive Fernandes (Financial Adviser)
Director – National Capital
Disclosure: I am the director of National Capital, a KiwiSaver advice firm. The information in this post is only general in nature and is not personalised financial advice. Please contact us if you want financial advice.
