NZ Tax Brackets 2025-2026: Complete PAYE Guide
New Zealand's tax brackets for the 2025-2026 tax year (1 April 2025 to 31 March 2026) are now fully in effect. Whether you are checking your payslip, negotiating a raise, or just want to understand what happens to your money, this guide covers everything: the five PAYE income tax brackets, the ACC earners' levy, KiwiSaver contributions, the independent earner tax credit, and student loan repayments.
The 5 NZ income tax brackets
New Zealand uses a progressive tax system with five PAYE brackets. These thresholds were updated as part of Budget 2024 and took full effect from 1 April 2025 — meaning the 2025-2026 tax year uses clean, non-blended rates for the first time since the changes.
| Taxable income | Rate | Tax on bracket |
|---|---|---|
| $0 – $15,600 | 10.5% | Up to $1,638 |
| $15,601 – $53,500 | 17.5% | Up to $6,632.50 |
| $53,501 – $78,100 | 30% | Up to $7,380 |
| $78,101 – $180,000 | 33% | Up to $33,627 |
| Over $180,000 | 39% | No cap |
How NZ tax actually works: worked examples
Example 1: $55,000 salary
| Bracket | Income in bracket | Rate | Tax |
|---|---|---|---|
| $0 – $15,600 | $15,600 | 10.5% | $1,638.00 |
| $15,601 – $53,500 | $37,900 | 17.5% | $6,632.50 |
| $53,501 – $55,000 | $1,500 | 30% | $450.00 |
| Total income tax | $8,720.50 |
Marginal rate: 30%. Effective rate: 15.9%. You keep about $46,280 before ACC and KiwiSaver.
Example 2: $85,000 salary
| Bracket | Income in bracket | Rate | Tax |
|---|---|---|---|
| $0 – $15,600 | $15,600 | 10.5% | $1,638.00 |
| $15,601 – $53,500 | $37,900 | 17.5% | $6,632.50 |
| $53,501 – $78,100 | $24,600 | 30% | $7,380.00 |
| $78,101 – $85,000 | $6,900 | 33% | $2,277.00 |
| Total income tax | $17,927.50 |
Marginal rate: 33%. Effective rate: 21.1%. Even though you are "in the 33% bracket," you only pay 33% on the $6,900 above $78,100.
Example 3: $120,000 salary
At $120,000, total PAYE is approximately $27,477.50, giving an effective tax rate of about 22.9%. Your marginal rate is 33%, but the average rate across all brackets is significantly lower.
ACC earners' levy (2025-2026)
The ACC earners' levy funds New Zealand's accident compensation scheme. It is deducted from your gross earnings alongside PAYE — you will see it as a separate line on your payslip.
For the 2025-2026 tax year, the ACC earners' levy rate is 1.67% of gross earnings (GST inclusive), up from 1.60% the previous year. The maximum insurable earnings cap is $152,790, meaning the maximum annual ACC levy is $2,551.59.
On a $75,000 salary, your ACC levy is approximately $1,253 per year, or $48.19 per fortnight. This is not optional — every earner in New Zealand pays it.
KiwiSaver contributions
KiwiSaver is New Zealand's voluntary workplace savings scheme for retirement. Employee contribution rates are: 3%, 4%, 6%, 8%, or 10% of gross salary. The default rate is 3%.
Your employer is required to contribute at least 3% on top of your salary (this is not deducted from your pay). You also receive a government contribution of 25 cents for every dollar you contribute, up to a maximum of $260.72 per year (effective from 1 July 2025, reduced from the previous $521.43).
KiwiSaver impact on a $75,000 salary
| KiwiSaver rate | Annual deduction | Fortnightly impact | Employer match |
|---|---|---|---|
| 3% (default) | $2,250 | $86.54 | $2,250 |
| 4% | $3,000 | $115.38 | $2,250 |
| 6% | $4,500 | $173.08 | $2,250 |
| 8% | $6,000 | $230.77 | $2,250 |
| 10% | $7,500 | $288.46 | $2,250 |
Note that the employer contribution is a minimum of 3% regardless of your chosen rate. Some employers offer matching above 3%.
Independent Earner Tax Credit (IETC)
The IETC is a tax credit for NZ tax residents earning between $24,000 and $70,000 per year who do not receive Working for Families tax credits, a main benefit, or NZ Super. The eligibility range was extended from the previous $48,000 cap as part of Budget 2024 changes.
The IETC provides up to $520 per year (equivalent to $20 per fortnight). It is applied automatically by IRD — you do not need to apply. If you are an employee, it is factored into your PAYE deductions through the "ME" tax code.
Student loan repayments
If you have a NZ student loan and are working in New Zealand, you repay 12% of every dollar earned above the repayment threshold. The threshold for the 2025-2026 tax year is $24,128 per year ($464 per week).
Student loan repayment examples
| Annual salary | Income above threshold | Annual repayment (12%) | Fortnightly |
|---|---|---|---|
| $45,000 | $20,872 | $2,505 | $96.35 |
| $60,000 | $35,872 | $4,305 | $165.58 |
| $75,000 | $50,872 | $6,105 | $234.81 |
| $100,000 | $75,872 | $9,105 | $350.19 |
The student loan interest rate for the 2025-2026 year increased to 4.9% (up from 3.3%), while late payment interest increased to 8.9%. However, interest is only charged if you are overseas — domestic borrowers remain interest-free while residing in New Zealand.
Secondary tax codes
If you have a second job, you use a secondary tax code. Secondary tax codes are designed to approximate the tax you would pay on your combined income. The codes for 2025-2026 are:
| Code | Combined annual income range | Rate |
|---|---|---|
| SB | $0 – $15,600 | 10.5% |
| S | $15,601 – $53,500 | 17.5% |
| SH | $53,501 – $78,100 | 30% |
| ST | $78,101 – $180,000 | 33% |
| SA | Over $180,000 | 39% |
Choose the code based on your total combined income from all sources, not just the second job. Using the wrong code is one of the most common mistakes — it leads to either a surprise tax bill or an overpayment at year end. IRD will reconcile the difference in your annual assessment.
Complete take-home pay breakdown at common salaries
Here is what various NZ salaries look like after all standard deductions (PAYE + ACC + KiwiSaver at 3%), assuming no student loan:
| Gross salary | PAYE | ACC (1.67%) | KiwiSaver (3%) | Take-home | Effective rate |
|---|---|---|---|---|---|
| $45,000 | $5,783 | $752 | $1,350 | $37,115 | 17.5% |
| $55,000 | $8,721 | $919 | $1,650 | $43,710 | 20.5% |
| $65,000 | $11,721 | $1,086 | $1,950 | $50,244 | 22.7% |
| $75,000 | $14,771 | $1,253 | $2,250 | $56,727 | 24.4% |
| $85,000 | $17,928 | $1,420 | $2,550 | $63,103 | 25.8% |
| $100,000 | $22,878 | $1,670 | $3,000 | $72,452 | 27.5% |
| $150,000 | $39,378 | $2,505 | $4,500 | $103,617 | 30.9% |
How to reduce your NZ tax legally
Claim the IETC. If you earn between $24,000 and $70,000, make sure you are using the "ME" tax code with your employer to receive up to $520 per year automatically.
Claim donation tax credits. You can claim 33.33 cents back for every dollar donated to IRD-approved charities. If you donated $600 during the year, that is a $200 tax credit. Claim through myIR or your tax return.
Check your tax code is correct. If you have changed jobs, started a second income, or stopped receiving a benefit, your tax code may be wrong. Log into myIR or use the IRD's online tax code finder to check.
Consider your KiwiSaver rate. While higher contributions reduce take-home pay, they also receive employer matching (minimum 3%) and government contributions. At 3% on a $75,000 salary, you contribute $2,250 but receive $2,250 from your employer plus up to $260.72 from the government — a guaranteed return that is hard to beat.