Fuel cost pressures and targeted tax relief in New Zealand

Rising fuel prices continue to place pressure on households and employers, prompting targeted policy responses in New Zealand and overseas. In New Zealand, the immediate focus has been on temporary support for lower-income working families, rather than broad-based fuel tax relief or targeted corporate tax measures.

We outline the relief introduced to date, the tax implications of higher fuel prices, and considerations for employers when supporting their people.

 

Temporary increase to the in-work tax credit

New Zealand has introduced targeted relief by temporarily increasing the in-work tax credit by NZD50 per week. This is expected to support approximately 143,000 working families with children facing rising fuel costs.

The increase took effect from 1 April 2026 and is temporary, ending on 31 March 2027 (or earlier if the price of 91 octane petrol falls below NZD3 per litre for four consecutive weeks).

At the time of publication, New Zealand has not introduced targeted corporate tax initiatives aimed at providing specific relief to businesses from rising fuel costs.

 

Tax implications of higher fuel prices

Higher fuel prices may increase goods and services tax (GST) collected on fuel sales. However, it remains uncertain whether this would translate into additional net revenue once any reduction in demand is taken into account.

Increased fuel prices do not, of themselves, translate into higher fuel excise duties, which are calculated on a per-litre basis rather than by reference to price.

Inland Revenue has confirmed that it remains open to “targeted, temporary and timely” initiatives.

 

How New Zealand’s response compares with Australia

At this stage, the New Zealand Government has not indicated whether it will take more drastic measures similar to those in Australia, although it has announced further targeted fuel-cost support for particular groups (including school communities).

• the Australian Government has raised its domestic settings to the second point of escalation in its four-point fuel plan. Australian measures have included halving fuel excise for three months (reducing tax on fuel by AUD26.3 cents per litre); and
• eliminating road user charges for three months for heavy vehicles.

Some Australian states have gone further, by reducing tax on fuel by an extra AUD5.7 cents per litre and offering free public transport for limited periods.