Are funeral expenses tax deductible in New Zealand?
We found no Inland Revenue (IR) rule that lets anyone deduct the cost of a funeral from their income tax, and IR's pages on looking after a deceased person's affairs do not list funeral costs as a deduction. What the law does give funeral costs is a high place among the estate's debts, so they can be repaid from the estate. That is repayment, not tax relief.
People searching this question usually mean one of two things, and the answers differ. The first is a tax deduction: can the money spent on a funeral reduce an income tax bill? The second is payment from the estate: can the person who paid get the money back before beneficiaries receive their share? We could find a sourced answer to the second and not to the first, so this page is careful about which is which. It is general information, not tax or legal advice. For a specific situation, ask IR on 0800 227 774, an accountant or a lawyer.
Two different questions
| Question | What we found |
|---|---|
| Does a funeral cost reduce income tax? | No IR page we read says it does. IR's pages on a deceased person's affairs do not mention funeral expenses. The Income Tax Act pages would not load for us, so we cannot quote its rules and we do not say a deduction exists. |
| Can the estate repay the person who paid? | Yes, in principle. Reasonable funeral expenses rank second in the order of payment when an estate cannot pay all its debts (Insolvency Act 2006, s393, applied by the Administration Act, s31). |
| Does reducing the estate save inheritance tax? | There is no inheritance tax. Estate duty ended for deaths on or after 17 December 1992. |
| Are grants for a funeral taxed? | Work and Income's Funeral Grant is non-taxable, and ACC says its funeral grant is tax-free. |
What Inland Revenue says about a death
IR's page for people looking after a deceased person's affairs says an executor must decide whether any reportable income received in the 28 days following death goes on a final income tax return for the individual or on a return for the estate (Inland Revenue: Looking after the affairs of someone who has died). A final income tax return for the individual can be filed only after IR has been told of the death. Estates and trusts report income on the IR6 (Inland Revenue: Estate or trust return). IR says to contact it on 0800 227 774 to find out if you need to file an estate or trust return. IR also notes that income not distributed from a deceased estate is taxed at 33% in the year of death and the next three years, after which the estate is taxed as a trust (Inland Revenue: Trustee tax rates).
Not one of these pages mentions funeral expenses. So we cannot tell you that an estate may or may not claim the funeral cost against its own income, and we will not guess. If the estate has taxable income, such as interest or rent after death, ask whoever prepares the IR6.
The part that is sourced: priority in the estate
The Administration Act 1969 treats the estate's assets as available to pay its debts, and where an estate cannot pay everything the administrator may use the priority order in Part 6 of the Insolvency Act 2006. That order starts with (a) the costs of administering the estate, then (b) reasonable funeral expenses, then (c) medical and hospital expenses in the last three months of life, then (d) other claims, and (e) the rest equally (Insolvency Act 2006, s393). Funeral expenses rank second, not first, and only "reasonable" ones count. A beneficiary's inheritance is paid after the debts. So in practice a funeral bill reduces what the beneficiaries receive: it comes off the net estate before distribution.
None of that touches anyone's tax. The person who paid the funeral director is repaid, but repayment is not income and not a deduction. If you are that person, see how to claim funeral expenses from an estate, and for the estate's side see paying funeral costs from the estate.
No inheritance tax, so no tax saving there
New Zealand abolished estate duty for deaths on or after 17 December 1992 (Estate Duty Abolition Act 1993, s3). IR says that generally you do not pay tax when you inherit property, though tax may apply on a later sale (Inland Revenue: Inheriting property). Because the estate itself carries no inheritance tax, spending on a funeral does not reduce one. See inheritance tax in NZ.
Money that helps with the cost
- Work and Income Funeral Grant. Up to $2,697.43 as at 1 April 2026, non-taxable, not repaid if the criteria are met, and tested on income and assets where the deceased was a partner or child. If the deceased is not your partner or child, their assets are deducted from the expenses (Work and Income: Funeral Grant).
- ACC funeral grant. Up to $8,236.40 for deaths from a covered injury, tax-free, paid to the director or reimbursed (ACC: Financial support after a death). See ACC survivors' grants.
- The bank. Banks can release money from the deceased's account to pay for the funeral without waiting for probate (govt.nz).
A business paying for an employee or director's funeral
The outline for this page asked about a business claiming a funeral cost for an employee or director. We found no IR source on that, and it depends on facts such as who the payment is made to and why, so we do not publish an answer. Ask an accountant. Employers should also see our guide to bereavement leave for time-off rights.
What to keep
Whatever the tax answer turns out to be for your situation, keep the funeral director's itemised invoice, receipts or bank statements showing what you paid, and the death certificate (the official certificate costs $35, per govt.nz). They support a claim on the estate, a Funeral Grant application and any question an accountant asks later. The funeral cost calculator helps you add up what you are likely to spend. Insurance premiums are a different tax question; see is funeral insurance tax deductible.
Planning ahead
This page is about tax after a death. For anyone planning their own arrangements, one way to fund costs is Momentum Life's Funeral Insurance, issued by Momentum Life Limited, which accepts New Zealanders aged 40 to 75 and pays a fixed benefit of $3,000 to $30,000 towards costs. In the first 24 months it pays only for accidental death within 90 days of the accident; for any other death in that window the premiums are refunded. Total premiums can end up larger than the benefit, and the benefit may not cover the whole funeral. Momentum's A.M. Best rating is B (Fair); the rating is explained on its financial strength page. The funeral insurance hub compares other providers, and the buttons on this page lead to Momentum's own quote. The wider picture is on the funeral costs hub and in paying for a funeral. The wider picture is on the funeral costs hub and in paying for a funeral.
Adviser's view
Do not plan on a tax deduction for a funeral. Inland Revenue's pages on a deceased person's affairs do not list funeral costs as a deduction, and we found no source that says otherwise. What funeral costs do get is a high place in the queue for repayment from the estate. That is a different thing, and it is worth claiming.
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Cite this page QuoteHub NZ (2026). Are Funeral Expenses Tax Deductible in NZ?. www.quotehub.co.nz/guides/estate/funeral-expenses-tax-deductible-nz. Updated 2026-10-20.
References
- Inland Revenue: Looking after the affairs of someone who has died
- Inland Revenue: Estate or trust return for someone who has died
- Inland Revenue: Trustee tax rates
- Inland Revenue: Inheriting property
- Insolvency Act 2006, s393
- Administration Act 1969, ss26, 31
- Estate Duty Abolition Act 1993
- Work and Income: Funeral Grant
- ACC: Financial support after a death
- govt.nz: What to do when someone dies
- govt.nz: Get a death certificate
- Momentum Life: Financial strength
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