Updated Vehicle Kilometre Rates for 2025
From the 2024–2025 income year, the IR Commissioner has updated the vehicle kilometre rates to better reflect the actual running costs of different vehicle types, Petrol, Diesel, Petrol Hybrid, and Electric.
In the past, a single Tier One rate applied to all vehicles. However, because running costs can vary significantly between vehicle types, separate Tier One rates have now been set for each category. This change helps ensure the rates more accurately reflect the reasonable costs of using each type of vehicle for business purposes.
The table of rates for the 2024-2025 income year
The Tier One rate is a combination of your vehicle's fixed and running costs. Use it for the business portion of the first 14,000 kilometres travelled by the vehicle in an income year. This includes private use travel.
The Tier Two rate is for running costs only. Use it for the business portion of any travel over 14,000 kilometres in an income year.
Vehicle Type Tier 1 rate per km Tier 2 rate per km
Petrol $1.17 $0.37
Diesel $1.26 $0.35
Petrol Hybrid $0.86 $0.21
Electric $1.08 $0.19
Focus on Parental Leave
Parental Leave payment increased from 1 July 2025
On 1st July 2025, the maximum weekly rate of parental leave payments increased to Gross $788.66 per week BEFORE TAX (PAYE, Student Loan, Child Support or KiwiSaver payments).
Work out leave entitlement here
Govt website - Leave information
Annual Leave After Parental Leave
When an employee returns from parental leave, any entitled Annual Leave received during parental leave OR in the 12 months from the return-to-work date, is calculated based on average weekly earnings (rolling 12-month average), NOT ordinary weekly pay. The law treats this annual leave entitlement differently to reflect the time spent on unpaid parental leave. Your payroll provider should be able help you check the correct payment rate and discuss your options.
Because this payment method can lead to a lower amount than usual, it’s good practice to explain this to the employee well before they go on parental leave. That way, they understand why their leave pay might be less than expected and be able to budget for this eventuality especially around a Christmas shutdown period.
This is the minimum legal requirement, as an employer, you can choose to go above this and pay the employee based on their current ordinary weekly pay if you wish.
Keeping in touch days (KIT Days)
Refers to working from time to time to perform work or keep in touch with your employer:
- Maximum of 64 hours of paid work for your employer during your parental leave payment period, and
- This work is not within the first 28 days after your child was born.
For any questions please contact the Accounted4 Payroll team.
Carolyn - Ext.837 - Email: carolyn.l@accounted4.co.nz
Kate - Ext.825 - Email: kate.c@accounted4.co.nz
Anne - Ext.831 - Email: anne.b@accounted4.co.nz
