PAYE NZ 2026/27: How It Works, Tax Codes and Deductions Explained

If you’ve looked at your payslip and wondered where a chunk of your pay went, this guide decodes it. It walks through everything that flows through Pay As You Earn (PAYE) in New Zealand for the 2026/27 tax year — the income tax, ACC levy, KiwiSaver and student loan deductions — and, crucially, how to get your tax code right. It’s general information, not tax advice. To calculate your own take-home pay, use our salary calculator.

How PAYE works

PAYE is the system Inland Revenue uses to collect income tax from employees through the year. Your employer calculates and deducts tax — plus ACC and any other applicable amounts — from every pay run and passes it to IRD, so most salaried employees never file a return. The tax system is progressive: your income is taxed in slices, and only the portion within a bracket is taxed at that bracket’s rate — not your whole salary. That’s a common misconception; moving into a higher bracket only taxes the extra dollars at the higher rate.

What comes out of your pay

Four things typically flow through PAYE — and two of them changed for 2026/27.

To show how the progressive brackets work: on a $70,000 salary you don’t pay 30% on all of it. You pay 10.5% on the first $15,600, 17.5% on the next $37,900, and 30% only on the remaining $16,500 — a total income tax bill of about $13,220, an effective rate of roughly 18.9%, well below the 30% marginal rate. Our tax rates guide covers the brackets in full.

On KiwiSaver specifically, note two 2026 changes: the default employee and employer rate rose from 3% to 3.5% on 1 April 2026, and the government contribution is now up to $260.72 a year (halved from $521.43 on 1 July 2025, at 25 cents per dollar you contribute, and cut off above $180,000 of income). Our KiwiSaver guide has the detail.

Getting your tax code right

Your tax code tells your employer how much to withhold. Getting it wrong is one of the most common reasons people end up with a surprise bill — or an overpayment — at year end.

The key ideas: use ME instead of M if you earn $24,000–$70,000 from one job with no Working for Families or NZ Super, to capture the Independent Earner Tax Credit (up to $520 a year, abating as you approach $70,000); add SL if you have a student loan; and for a second job, use a secondary code (SB/S/SH/ST/SA) that matches where your total income sits, not M.

A quick take-home example

Putting it together for someone earning $75,000 on the M SL code in 2026/27: income tax is about $14,720, the ACC levy about $1,313 (1.75%), KiwiSaver $2,625 (3.5%), and student loan about $6,105 (12% of income above $24,128) — leaving roughly $50,200 a year, or about $1,930 a fortnight. These are illustrative; for your exact figures (including other income, tax credits or a non-standard code), use our salary calculator or IRD’s tools.

Student loan repayments through PAYE

If you’re NZ-based with a student loan, repayments are deducted automatically once your income passes the threshold — 12% of every dollar above $24,128 a year (about $464 a week) for 2026/27, triggered by the SL suffix on your code. You can make voluntary extra payments directly to IRD to clear it faster (worth remembering NZ loans are interest-free while you’re NZ-based), and if your income drops below the threshold — say, on parental leave — you can apply for a repayment holiday. Overseas-based borrowers follow a different, balance-based regime that isn’t collected through PAYE.

Common PAYE mistakes

A note on GST

PAYE covers your employment income. If you’re self-employed or run a business, GST is the other main tax — a flat 15% on almost all goods and services. To add GST, multiply the price by 1.15; to find the GST in a GST-inclusive price, divide by 1.15 (so a $230 price contains $30 of GST). You must register once your turnover passes $60,000 in any 12-month period, and voluntary registration below that can pay off if you have GST expenses to claim. That’s a separate topic from PAYE — if it applies to you, IRD and business.govt.nz have the full registration and filing rules.

Your next steps

Getting your PAYE settings right is one of the simplest, highest-impact money moves there is. Confirm your tax code with IRD (it takes minutes), check you’re capturing the IETC if you’re eligible, and make sure any student loan SL suffix is in place. Small adjustments to your tax code, KiwiSaver rate or voluntary loan repayments can add up to hundreds — sometimes thousands — of dollars a year.

Disclaimer: This article is general information about PAYE in New Zealand, not tax advice. Tax rates, thresholds, the ACC levy, KiwiSaver settings and the student loan threshold change — the figures here are for the 2026/27 tax year (1 April 2026 – 31 March 2027) and should be confirmed with Inland Revenue before you rely on them. For your tax code and exact obligations, see IRD (ird.govt.nz) or talk to an accountant.

Frequently asked questions

What is PAYE in New Zealand?

Pay As You Earn is how IRD collects income tax from employees. Your employer deducts income tax — plus the ACC levy, KiwiSaver and any student loan repayments — from each pay and sends it to IRD, so most salaried employees never file a tax return.

What are the income tax brackets for 2026/27?

10.5% on income to $15,600, 17.5% to $53,500, 30% to $78,100, 33% to $180,000, and 39% above that. The system is progressive, so only the income within each band is taxed at that band’s rate. Brackets are unchanged from 2025/26.

What is deducted from my pay besides income tax?

The ACC earners’ levy (1.75% of earnings up to $156,641 in 2026/27), KiwiSaver if you’re enrolled (default 3.5% from 1 April 2026, matched by your employer), and student loan repayments if you have one (12% of income above $24,128, via the SL code).

How do I know which tax code to use?

Use M for your main job (ME if you’re eligible for the Independent Earner Tax Credit), add SL for a student loan, and use a secondary code (SB/S/SH/ST/SA) matching your total income for any second job. If you don’t provide an IRD number or code, tax is deducted at 45%.

What is the student loan repayment threshold?

For 2026/27 it’s $24,128 a year (about $464 a week), and you repay 12% of every dollar earned above it through PAYE when your code includes SL. NZ-based loans are interest-free, and you can make voluntary extra repayments to clear yours faster.

How much is the KiwiSaver government contribution?

Up to $260.72 a year (halved from $521.43 in July 2025), if you contribute at least $1,042.86 in the year and earn under $180,000. It’s separate from your and your employer’s contributions.

Related guides: Average Salary in New Zealand, Minimum Wage NZ and Income Tax NZ.