Family Tax Credit and Best Start Credit Increases

The Family Tax Credit (FTC) and Best Start Credit (BSTC) amounts are increasing in line with inflation, effective from 1 April 2024. This means more financial support for families with children.

Here's what you need to know:

• The FTC for the eldest child will increase from $7,121 to $7,524.

• The FTC for subsequent children will increase from $5,802 to $6,130.

• The BSTC will increase from $3,632 to $3,838.

These changes will automatically apply for the 2024-25 tax year and onwards.

Here are some additional details:

• The increases are due to the cumulative Consumer Price Index (CPI) exceeding 5%.

• This ensures that the FTC and BSTC maintain their real value over time.

Why are these changes happening?

The increases are linked to the Consumer Price Index (CPI), which measures inflation. The cumulative CPI for the year ending September 2023 exceeded 5%, triggering an automatic adjustment to the FTC and BSTC rates to ensure they maintain their real value over time.

What does this mean for families?

Eligible families will receive higher tax credits, providing them with additional financial support to help with the cost of raising children.

What are the next steps?

The changes will be automatically applied by Inland Revenue, so families don't need to take any action to receive the increased payments.

Source: Income Tax (Tax Credit) Order 2023, Legislation Govt NZ website