The Government is cutting the tax rates on people's earnings from investments to bring them in line with personal tax rates.
Revenue Minister Peter Dunne says the new resident withholding tax rates will depend on the personal tax rates of individuals, ranging from 12.5% to 38%.
People who invest through financial institutions, and not directly themselves, will face rates ranging from 12.5% to 30% for those earning more than $70,000 a year.
Mr Dunne says the changes will be introduced in a taxation bill later in July and will come into effect from April next year.