The cap on the donation tax credit will cost New Zealand far more than it saves

Media release
29 May 2026

Budget 2026 introduces a $100,000 annual cap on donations eligible for the 33% donation tax credit - which was previously uncapped*. The Government projects this move will save just $51.8m over three years. Officials already acknowledge the change could reduce very high-value donations to arts, culture, and other charities that depend on major gifts.

“This is not a small administrative tweak. It is a structural change to New Zealand's philanthropic landscape at precisely the wrong moment in history,” says Eleanor Cater, CEO of Community Foundations of Aotearoa New Zealand.

“Countries around the world are at the beginning of the largest intergenerational wealth transfer in history. Here in Aotearoa New Zealand, an estimated $1.6 trillion will pass between generations over the coming two decades. The decisions made right now - in policy and in fiscal incentives - will determine whether that inherited wealth benefits our communities or simply concentrates wealth further.”

“Fiscal incentives across the world have been proven to be key levers in encouraging philanthropy and, in an environment when other nations are developing fiscal incentives to support this growth, this latest announcement capping the tax credit for donations is a giant leap backwards for New Zealand. It disincentivises major gifts to charities and the communities they serve.”

Most of Community Foundations of Aotearoa New Zealand's network of 18 community foundations are less than 25 years old and together already hold $350 million in funds under management and a $1.2 billion bequest pipeline of over 700 bequests.

Acorn Foundation CEO and CFANZ Chair, Lori Luke agrees. “These are trusted, perpetual, place-based vehicles that channel private wealth into permanent community benefit, which is exactly the work that should be encouraged, not undermined. “

Cater notes, “The Government frames the cap as ‘expenditure discipline,’ noting that recent tax credit growth has been driven by a small number of very large donors. But this framing misses the scale of the potential ahead.”

Luke adds, “Other OECD countries are working to deepen their philanthropic culture and incentivise large gifts. This announcement pushes New Zealand in the opposite direction, and communities that depend on the growth of long-term philanthropic support will bear the cost.”

Read more about New Zealand's tax credit problem in our recent blog post here >>

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*up to the level of income tax paid