The first of three tax cuts promised by the National Party during the election campaign comes into effect on Wednesday.
But with the Government's books going deeper into the red, the first round of cuts may be the last for some time.
Finance Minister Bill English has again signalled that cuts planned for the next two years may be deferred.
ACT Party MP Sir Roger Douglas says tax cuts will be unaffordable if the Government is not prepared to cut its own spending.
The Council of Trade Unions says the tax cuts taking effect on Wednesday are a bittersweet day for workers.
It says the good news is a modest increase in the minimum wage, and a rise in the minimum contribution employers have to make to KiwiSaver.
But it says workers who earn $40,000 or less and receive Working for Families tax credits will miss out on the tax cuts others are getting.
It says that is unfair, and is made worse by the outlook for workers, which is grim, as the Government signals what it calls attacks on holidays, public sector jobs and the Accident Compensation Corporation.
The tax cuts apply to those earning more than $42,000 a year. Increases in take-home pay range from about $10 a week up to $24 for those on $100,000 a year.
A $10-a-week tax credit also comes into effect for people earning between $24,000 and $44,000 and who are not receiving any other entitlement.
However, a rise in ACC levies introduced at the same time will mean employees on the average wage of $48,500 a year will pay $2.80 more a week.
Finance Minister Bill English says the tax cuts will put cash in people's pockets in the short term, and in the longer term move the country towards a tax system which has stronger incentives for people to get ahead.
Prime Minister John Key rejected criticism from Labour that the Government's tax cut programme benefits only the rich.
