Updated Vehicle Kilometre Rates for 2026
The Inland Revenue Commissioner has updated the vehicle kilometre rates to better reflect the actual running costs of different vehicle types — petrol, diesel, petrol hybrid, and electric.
Previously, a single Tier 1 rate applied to all vehicles. However, as running costs vary significantly between vehicle types, separate Tier 1 rates have now been introduced for each category. This change ensures the rates more accurately reflect the true cost of using each type of vehicle for business purposes.
Rates for the 2025–2026 Income Year
The Tier 1 rate includes both fixed and running costs. It applies to the business portion of the first 14,000 kilometres travelled by the vehicle in an income year (including private use).
The Tier 2 rate applies to running costs only and is used for the business portion of any travel over 14,000 kilometres.
Vehicle Type | Tier 1 Rate (per km) | Tier 2 Rate (per km) |
Petrol | $1.20 | $0.37 |
Diesel | $1.30 | $0.38 |
Petrol Hybrid | $0.90 | $0.24 |
Electric | $1.22 | $0.23 |
Parental Leave Payments Increase (Effective 1 July 2026)
From 1 July 2026, the maximum weekly parental leave payment has increased to:
$811.05 gross per week (before tax and deductions such as PAYE, Student Loan, Child Support, or KiwiSaver)
The minimum payment for self-employed individuals has increased to $239.50 per week
For more information:
Annual Leave After Parental Leave
When an employee returns from parental leave, any annual leave received:
during parental leave, or
within the 12 months after returning to work,
must be calculated based on average weekly earnings (rolling 12-month average) — not ordinary weekly pay.
This approach reflects the impact of unpaid parental leave on earnings.
Because this can result in lower-than-usual leave payments, it is best practice to discuss this with employees before they go on parental leave, so they can plan accordingly (particularly if a shutdown period is approaching).
Employers should note:
This is the minimum legal requirement
You may choose to top up payments and use ordinary weekly pay instead
Keeping in Touch (KIT) Days
Employees on parental leave may work occasionally to stay connected with their workplace.
Key points: Up to 64 hours of paid work can be completed during the parental leave payment period. Work cannot occur within the first 28 days after the child’s birth
General enquiries Email: payroll@accounted4.co.nz
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