A change to the in-work tax credit will give low-middle income families with children up to $50 a week to “soften the impact” from rising fuel costs caused by the conflict in the Middle East, the Government announced on Tuesday.
Finance Minister Nicola Willis had been signalling a temporary measure in light of higher costs, confirming the change would kick in on April 7 and would last either one year or when 91 octane had been below $3 a litre for four weeks in a row - whatever comes first.
“About 143,000 working families with children will get an extra $50 a week through a boost to the in-work tax credit,” she said.
“The boost will also expand eligibility to around 14,000 additional working families, who will receive the tax credit at an abated rate.”
Prime Minister Christopher Luxon said while New Zealanders were resilient, it was an understatement to say the last couple of years had been tough.
"Because of those high prices, many kiwis are making sacrifices to their household budgets. Good government means looking after your people."
It is estimated to cost $373 million if it were to last a year. Counting against the Government’s 2026 Budget operating allowance, it had been factored into Treasury’s fiscal forecast.
“Funding the policy this way will not add to forecast debt or inflationary pressures. It is consistent with the Government’s fiscal strategy which seeks to balance the books and bend the debt curve down.”
The in-work tax credit goes to parents with dependent children. One parent must be employed and neither parent can receive a main benefit. The payment is currently $97.50, with parents with more than three children receiving $15 for every child after the fourth.
It goes to those with an annual family income of up to about $89,000 for one child, $112,000 for two and $135,000 for three.
"Operation Epic Fury and its resulting fallout is hurting Kiwis," Willis said.
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