"This is a significant milestone for the ACC scheme, which means we will now have fairer work levies based on industries with the greatest injury costs paying their true share of those costs," Ms Kaye said.
Residual levies were introduced in 1999 when ACC moved to a fully funded model, which meant it was required to build up enough money to meet the anticipated lifetime costs of all pre-existing claims.
The residual levies have been collected since 1999, in order to build up enough funds to meet the lifetime costs of claims received before that date.
How much certain businesses paid was worked out on how many injuries occurred in each industry from 1999 and prior.
The Government expects around 53 per cent of businesses will pay lower work levies as a result of today's announcement, with 47 per cent paying more.
ACC will shortly release its proposed levy rates for 2016/17, which will include proposed levies for different industry groups.
Today's announcement has no impact on earners' and motor vehicle levies.
"The ACC board has advised me they intend to propose significant average levy reductions next year, which could mean only 25 per cent of businesses get a work levy increase," Ms Kaye said.
"Residual levies were always going to be removed, once enough funds were collected to meet ongoing, pre-1999 claims.
"Residual levies were intended to be collected until 2019, so today's decision confirms the improved financial performance of the ACC scheme."
The early axing of residual levies will please business groups, but has worried the Council of Trade Unions (CTU).
Its economist Dr Bill Rosenberg in July told a Parliamentary select committee that the consequences of the phasing out of residual levies needed to be examined.
The scheme is not currently meeting the needs of New Zealanders suffering from occupational disease and the removal of residual levies would likely make this worse, the union argued.
The Accident Compensation (Financial Responsibility and Transparency) Amendment Bill will today be before Parliament for its committee stage.
The legislation was put forward earlier this year, and will put in place a new framework to set ACC levies, taking effect in 2016/17.
It will give the Government involvement from the start of the process through the setting of a funding policy, which will then guide ACC's development of recommended levy rates.
Ms Kaye has denied that was done to avoid the political embarrassment of the Government not cutting levies as much as ACC recommended, but rather was to enable better long-term planning and say "at the outset what the rules of the game are".
Labour ACC spokeswoman Sue Moroney said the early removal of the residual levies was evidence that National had "manufactured" a crisis in ACC when it took office and hiked up levies higher than they needed to be.
"Nothing is going to change the fact that New Zealanders have been over-charged for their ACC levies for the seven years under this National Government and the early removal of the residual levy confirms that."
She said she hoped that when the adjustments were made to decide which were the more dangerous and safer industries that there was no repeat of the shambles that took place with the Workplace Health and Safety Reform bill - in which worm farming was deemed more dangerous than dairy farming.
