PAYE rates
New Zealand taxes income progressively, with no tax-free threshold — the lowest rate applies from the first dollar, and each higher band adds tax only on the income within it. Alongside PAYE, the ACC Earners’ Levy is deducted up to a liable-earnings cap. The rates shown are those in force for the current tax year.
How PAYE income tax is charged
In New Zealand your employer takes income tax out of every pay under PAYE — Pay As You Earn — and passes it to Inland Revenue on your behalf, so you don’t settle a lump sum at the end of the year. Tax is charged progressively: your yearly income is split into bands, and each band is taxed at its own rate. A higher rate only ever applies to the income that falls inside a higher band, never to your whole pay — so crossing into a new bracket costs you more only on the slice above the line.
The rates below are for the 2026/27 tax year (1 April 2026 to 31 March 2027). New Zealand’s tax year runs from 1 April to 31 March, not the calendar year, so a “year” here means that April-to-March window.
The income-tax brackets
There are five marginal bands, from 10.5% on the first band up to 39% on income above the top threshold:
| Annual taxable income | Rate |
|---|---|
| $0 – $15,600 | 10.5% |
| $15,601 – $53,500 | 17.5% |
| $53,501 – $78,100 | 30% |
| $78,101 – $180,000 | 33% |
| $180,001 and over | 39% |
These are marginal rates. Someone earning into the third band, for example, still pays the 10.5% rate on their first band of income and the middle rate on the band above it — only the income inside the third band is taxed at that band’s rate.
There is no tax-free threshold
This is the fact that most surprises people arriving from another country: New Zealand has no tax-free threshold and no personal allowance. PAYE applies from the very first dollar you earn, at the 10.5% rate on the lowest band. There is no slice of income at the bottom that comes to you untaxed, so the gap between a gross salary and take-home pay starts earlier than many expect.
The ACC Earners’ Levy
Alongside income tax, a second deduction comes out of your pay under PAYE: the ACC Earners’ Levy. It funds ACC cover for injuries that happen outside work — at home, playing sport, on the road. It is a flat 1.75% of your liable earnings, charged up to a cap of $156,641 a year, which means the levy is never more than $2,741.22 in a year. It is a genuine deduction from your pay, separate from income tax, and this calculator itemises it on its own line rather than folding it into PAYE.
The Independent Earner Tax Credit
Working the other way, the Independent Earner Tax Credit (IETC) can lower the PAYE of middle-income earners who aren’t receiving Working for Families, an income-tested benefit or NZ Super. Where you’re eligible it is worth up to $520 a year, then tapers away as income rises past $66,000. It is a credit against your tax, not a separate deduction — the calculator applies it only when you tell it you qualify.
Tax codes
Your tax code tells your employer how much PAYE to deduct. For most people on a single job the code is M (main income, no student loan). If you claim the Independent Earner Tax Credit through your pay, the code is ME. If you’re repaying a student loan, an SL is added to your code — for example M SL — which tells payroll to take the loan repayment as well. Using the wrong code is the most common reason a take-home figure comes out unexpectedly high or low.
The rates on this page are the rates in force for the current tax year; the content is in preparation and pending review.