In a revealing new study, small business operators across New Zealand are grappling with unprecedented levels of strain, with almost half contemplating walking away from their enterprises entirely. Released by cloud-based accounting platform Xero on February 12, 2026, the research sheds light on what the company terms the “emotional tax” – the unseen personal burdens that entrepreneurs endure amid economic pressures.
The research findings paint a stark picture of the current landscape for Kiwi business owners.
A striking 75% reported that this financial year has been more taxing on their mental health compared to previous ones.
Primary culprits include escalating operational costs, cited by 48% of respondents, and fluctuating customer demand affecting 30%.
Financial administration emerges as a major pain point, stressing out 67% of those surveyed.
This culmination of worries has led 47% to seriously consider shutting down their ventures, highlighting how emotional exhaustion can threaten the very survival of small businesses.
The end-of-year period amplifies these challenges, with 42% finding it the most overwhelming time.
Common issues include scrambling for documentation (34%), fretting over potential errors (31%), and facing unexpected tax results (54%), which are often unfavorable.
Such stressors don’t just affect mindset; they erode productivity. On average, owners lose five hours of effective work weekly due to anxiety, amounting to roughly 30 full days annually.
Sleep deprivation compounds the problem: over half (55%) get fewer hours of rest since launching their businesses, and 12% sacrifice five or more hours nightly.
Alarmingly, only a small fraction – 10% – turn to professional advisors like accountants for guidance during these tough moments.
Xero’s concept of the “emotional tax return” encapsulates these intangible costs.
It refers to the sacrifices made in pursuit of business success, such as forgoing family gatherings, clocking endless overtime, or compromising personal well-being.
Bridget Snelling, Xero’s Country Manager for Aotearoa New Zealand, explains, running a small operation demands tough trade-offs – like skipping a child’s event or skimping on sleep.
This “hidden levy” undermines not just daily life but also professional performance, slowing decisions, stifling innovation, and increasing errors.
Snelling emphasizes that proactive steps, including leveraging digital tools and early consultations with experts, can mitigate these effects and prevent unpleasant surprises at tax time.
The study underscores broader implications for New Zealand’s economy, where small businesses form the backbone.
With rising inflation and market volatility, owners are urged to prioritize mental health.
Xero advocates reaching out to support networks promptly and points to resources from the Mental Health Foundation of New Zealand for those in need.
To turn awareness into action, Xero has launched the Emotional Tax Refund campaign.
This report arrives at a critical juncture, reminding stakeholders that behind every balance sheet are human stories of resilience and vulnerability.
By addressing the emotional tax head-on, small business owners might not only sustain their ventures but also reclaim balance in their lives.
