2026 US Tax Rates for Americans in New Zealand

For the vast majority of Americans’ overseas, filing US taxes each year is just a compliance obligation, without any actual tax owing to the States. However, there are instances whereby even a US citizen residing in New Zealand, can become subject to a US liability.

As we know, as a US citizen or green card holder, you generally remain subject to US federal income tax on your worldwide income, even if you live outside the United States.

The US has a progressive federal income tax system. This means that moving into a higher tax bracket does not mean all of your income is suddenly taxed at that higher rate. Instead, different portions of your taxable income are taxed at different rates.

For 2026, the federal individual income tax rates remain 10%, 12%, 22%, 24%, 32%, 35% and 37%.

Unlike New Zealand taxes, the income tax brackets are adjusted for inflation annually, preventing the bracket creep which is frequently discussed in the New Zealand media.

We’ll discuss below how Foreign Tax Credits come into play with regards to the US tax rates, which in many cases, offset US tax entirely.

What are the 2026 US Tax Rates?

The following rates apply to taxable income, rather than your total income.

Married Filing Jointly (includes marriages recognised under the law where the taxpayer is resident - but not NZ defacto status)

Head of Household

The IRS published the 2026 tax brackets in Revenue Procedure 2025-32.

Foreign Tax Credits

Fortunately, for those who are tax resident of New Zealand, we can usually take advantage of the NZ US DTA (double tax treaty), which enables Foreign Tax Credits to be claimed.

A foreign tax credit, is a credit claimed (for NZ tax paid) in the US tax return, against a certain type of income.

For example:

-       NZ Wages of $100,000 – lets say the NZ tax works out as $28,000

-       These wages reported in the US tax return – US tax calculated at $16,000

In the above example, we have more than enough NZ foreign tax credits, to offset the $16,000 US tax liability.

2026 standard deduction

Most taxpayers can reduce their income before applying the tax brackets by claiming either the standard deduction or itemized deductions. Another way of looking at this is a “tax free threshold”.

So, for example lets say:

NZD Income of $50,000 – We convert this to USD and it comes to $30,000 USD

The $30,000 USD is entered into your US tax return, and then the appropriate standard deduction below is applied (lets say Single and $16,100).

So now, we take the $30,000 income, reduce it by $16,100 as our tax free threshold, which leaves $13,900 USD leftover as US taxable income.

We can then apply the foreign tax credits for NZ tax paid against this income.

For 2026, the standard deduction is:

These amounts were increased for inflation for 2026.

What about US capital gains tax in New Zealand?

US capital gains tax does still apply to the sale of assets outside the US (ie a home, car, stock or other items). As New Zealand doesn’t currently have a broad capital gains tax, then there is usually no foreign tax credit available to offset the US capital gains tax liability.

For 2026, the long-term capital gains rates for most individuals remain 0%, 15% and 20%, depending on taxable income.

The 2026 thresholds are:

Amounts above the applicable threshold are generally taxed at 20%.

It should be noted that capital gains tax on collectibles, crypto and other assets are taxed at flat rates, which we discuss broadly in our article here.

If you’d like to discuss any of the points in this article, reach out to us for expert US tax advice in New Zealand – info@usatax.nz