1. The Structure of New Zealand PAYE
New Zealand operates one of the most streamlined tax systems in the OECD. Personal income tax is administered by **Inland Revenue (Te Tari Taake / IRD)**. Unlike federal systems, New Zealand has no regional, provincial, or city personal income taxes.
Every pay period, your employer withholds PAYE income tax, ACC Earners' Levy, and KiwiSaver contributions based on the **Tax Code** declared on your IR330 form.
2. Revised Progressive PAYE Tax Brackets
Following recent budget tax threshold indexation, New Zealand personal income tax brackets are structured as follows:
- **$0 to $15,600:** 10.5%
- **$15,601 to $53,500:** 17.5%
- **$53,501 to $78,100:** 30.0%
- **$78,101 to $180,000:** 33.0%
- **Over $180,000:** 39.0%
2025/2026 New Zealand PAYE Marginal Tax Brackets| Taxable Income Band | Marginal Rate | Maximum Tax in Band |
|---|
| $0 to $15,600 | 10.5% | $1,638.00 |
| $15,601 to $53,500 | 17.5% | $6,632.50 |
| $53,501 to $78,100 | 30.0% | $7,380.00 |
| $78,101 to $180,000 | 33.0% | $33,627.00 |
| Over $180,000 | 39.0% | 39c per $1 on excess |
3. ACC Earners' Levy: Rates & Maximum Cap
The Accident Compensation Corporation (ACC) provides universal, no-fault 24-hour injury cover for all New Zealanders and visitors.
- **Earners' Levy Rate:** **1.60%** (collected automatically through PAYE).
- **Maximum Taxable Earnings Cap:** **$142,283**.
- **Maximum Annual Levy:** **$2,276.52**. Any earnings exceeding $142,283 are free from the ACC levy.
4. KiwiSaver Deductions & Employer Matching
KiwiSaver is New Zealand's voluntary, work-based retirement savings scheme:
- **Employee Contribution Options:** 3%, 4%, 6%, 8%, or 10% of gross salary.
- **Compulsory Employer Contribution:** Employers must contribute a minimum of **3%** of gross salary on top of wages (subject to Employer Superannuation Contribution Tax - ESCT).
- **Government Contribution:** The Crown contributes 50 cents for every dollar you contribute, up to a maximum annual government payment of **$521.43** (for contributions of at least $1,042.86 between 1 July and 30 June).
5. Independent Earner Tax Credit (IETC)
The **Independent Earner Tax Credit (IETC)** provides up to **$520 per year** ($10/week) for individuals earning between $24,000 and $70,000 who do not receive Working for Families Tax Credits or other social support.
6. Worked Example: $85,000 NZD Salary
For an employee in Auckland earning **$85,000 NZD gross salary** (Tax code 'M', 3% KiwiSaver):
1. **Gross Salary:** $85,000.00
2. **PAYE Income Tax:**
- First $15,600 @ 10.5% = $1,638.00
- $15,601 to $53,500 ($37,900 @ 17.5%) = $6,632.50
- $53,501 to $78,100 ($24,600 @ 30.0%) = $7,380.00
- $78,101 to $85,000 ($6,900 @ 33.0%) = $2,277.00
- **Total PAYE Tax:** **$17,927.50**
3. **ACC Earners' Levy (1.60%):**
- 1.60% × $85,000 = **$1,360.00**
4. **KiwiSaver Employee Deduction (3%):**
- 3% × $85,000 = **$2,550.00**
5. **Total Deductions:** $17,927.50 + $1,360.00 + $2,550.00 = **$21,837.50**
6. **Net Annual Take-Home Pay:** $85,000 - $21,837.50 = **$63,162.50**
7. **Fortnightly Take-Home Pay:** **$2,429.33**
8. **Employer KiwiSaver Matching (3% gross):** **$2,550.00** (less ESCT) credited to your retirement fund.
7. New Zealand Student Loan Deductions (12%)
If you have an interest-free New Zealand student loan, repayments are deducted at **12%** on gross earnings over the annual repayment threshold of **$24,128** (using tax code 'M SL').
8. IRD Tax Codes Explained (M, ME, SB, SH)
Common New Zealand tax codes:
- **M:** Main job (no student loan).
- **M SL:** Main job with student loan.
- **ME:** Main job eligible for Independent Earner Tax Credit.
- **SB / S / SH / ST / SA:** Secondary employment tax codes taxed at flat marginal rates.
9. Frequently Asked Questions
Common questions regarding New Zealand IRD income tax and paycheck withholdings.
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