PAYE Breakdown (Pay as You Earn)
|Salary Before Tax|
|Total Tax Due|
|Salary After Tax||Enter salary|
|Independent Earner Tax Credit (IETC)|
|Accident Compensation Corporation (ACC)|
|Your Take-Home Pay:|
|Your Gross Salary:|
|Effective Tax Rate:|
|Tax Deadline:||7 Jul|
How to Use the Income Tax Calculator for New Zealand
In just a couple of clicks, our New Zealand income tax calculator can estimate what you'll owe in taxes this year. Simply select how often you're paid, enter the gross amount, and press the calculate button. It will return your estimated take-home salary along with a breakdown of expenses.
Of course, taxes are complicated and vary depending on personal circumstances. As such, we've made a couple of assumptions for simplicity, including that you aren't married and have no dependents. In other words, your take-home salary might look different once all circumstances and deductions have been accounted for.
How Is Income Tax Calculated in New Zealand?
Taxes in New Zealand are overseen by Inland Revenue (IR) and follow a progressive rate from 10.5% to 39%, which means your marginal tax rate increases as your income grows. If you're employed, your taxes and deductions will be automatically handled by your employer, as we'll discuss in the next section. If you're self-employed, you must calculate and file them yourself.
There are two major tax expenses and one credit that most NZ taxpayers can expect. Our income tax calculator for New Zealand accounts for each of them:
- Income Tax, which is what you pay on your individual income.
- Accident Compensation Corporation (ACC), which provides healthcare and rehabilitation for any injuries you receive outside of work.
- Independent Earner Tax Credit (IETC), which provides tax credits to residents earning between $24,000 and $48,000, as we'll discuss in our IETC section.
How Is Tax Paid in New Zealand and What Is PAYE?
Anyone who earns money in New Zealand must pay taxes. Income tax in New Zealand follows the Pay as You Earn (PAYE) scheme, under which employees have their taxes deducted from and credits applied to their paychecks by their employers. Your employer uses the tax code that you presented at the start of your employment to determine how your income is taxed.
On the other hand, if you're self-employed or have a complicated employment situation, such as having multiple jobs, you need to claim your income and expenses by filing an IR3 individual tax return. If you're a non-resident, then use the IR3NR (Non-Resident) form. On these documents, you'll report your financial information for the previous tax year (observed between April 1st – March 31st). The deadline to file is July 7th unless you have an extension or tax agent.
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What Is the Independent Earner Tax Credit (IETC)?
Our NZ tax calculator also takes the IETC into consideration. The IETC is a tax credit available to all New Zealand residents who make between $24,000 and $48,000. It offers up to $520 of tax credits and is deducted from your income tax — not your taxable income. You can check how much IETC you are entitled to by using our PAYE calculator.
If your income is between $24,000 and $44,000, you're eligible for $10 per week. If your income is in the $44,001 to $48,000 range, then your credit will be reduced by 13 cents for every dollar earned above $44,000. If you still need to claim the IETC, you can fill out the tax code declaration — IR330 with tax code "M" or "M SL", and then hand it to your employer on your next payday. If you are not sure what your tax code is, see our section below on Tax Codes for Individuals.
What Is Kiwisaver and How Does It Work?
KiwiSaver is a voluntary savings scheme offered by IR. In short, it helps you prepare for retirement by collecting a portion of your income as a contribution every time you're paid. This happens at source, so once you're enrolled, all contributions are applied by your employer through wage deductions according to the rate you pick. By default, the contribution rate is 3%, but you can also choose to contribute 4%, 6%, 8%, or 10% of your income.
To be eligible, you must be a New Zealand citizen or a permanent resident who spends most of your time in the country. Note that, to keep our NZ income tax calculator easy to use, we do not include KiwiSaver contributions. However, you can calculate your contributions very easily by subtracting your contribution rate from your before-tax pay. This will not affect your taxes due, which are calculated on the full gross pay.
What Is an IRD Number and How to Register for One?
Having an IRD number is central to just about every financial activity in New Zealand. IRD numbers act as identifiers, keeping track of the taxes you pay and the entitlements that are owed to you. There are steep consequences if you don't have an IRD number or if you fail to provide it to your employer — you'll be automatically taxed at the higher non-declaration rate of 45%.
If you want to earn an income, open a bank account, take out a loan, or join KiwiSaver, you need to apply for an IRD number first. The IR website provides walkthroughs for attaining IRD numbers for NZ citizens and for new arrivals.
How Much Tax Do New Zealanders Usually Pay?
To give you a clearer picture of what taxes people pay at different income levels, we've compiled a table of common salaries along with their associated tax rates, take-home pay, and total taxes due. You can see the progressive tax rate in action; as gross salary climbs up from the minimum wage ($44,096) to the median salary ($61,828), the effective, or average, tax rate follows suit from 16% to 20%.
If you want to see information about living expenses in New Zealand as well as average salaries per region and industry, then check out our Salary Calculator for New Zealand.
|Gross Salary||After-Tax Pay||Effective Tax Rate||Tax Due|
Taxes in New Zealand
Now that we've covered the basics, let's take a closer look at the different kinds of taxes that are applied to earned individual income in New Zealand as well as the tax codes that correspond to taxpayer circumstances.
Tax Codes for Individuals
The IR has a helpful flowchart you can use to quickly determine your tax codes. "M" is the tax code for your highest source of income — if you're an NZ tax resident making between $24,00 and $48,000, you're either "ME SL" (with a student loan) or "ME" (without a student loan). If you aren't a tax resident, you're "M" (no student loan) or "M SL" (with a student loan). For additional specialty and secondary income tax codes, see the flow chart linked above.
Individual salaries in New Zealand are taxed at a progressive rate, starting at 10.5% for incomes under $14,000 and stopping at 39% for incomes over $180,000. As we covered earlier, employed individuals will have their income tax automatically deducted by their employer via the PAYE scheme. Only self-employed individuals or those with complicated employment circumstances need to manually file their taxes.
|Taxable Income||Rate Applied|
|$0 to $14,000||10.5%|
|$14,000 to $48,000||17.5%|
|$48,000 to $70,000||30%|
|$70,000 to $180,000||33%|
|$180,000 or more||39%|
Accident Compensation Corporation (ACC)
Also known as the "Earners' levy", ACC levies entitle you to insurance. By making contributions, you become eligible for healthcare and rehabilitation in the event that you're hurt outside of work. For instance, if a DIY house project goes wrong and you need medical attention, the Earners' levy will go right into your account to help cover the costs. In the 2022 tax year, the ACC is being charged at a flat rate of $1.46 per $100.