Table of Contents
Introduction
Understanding PAYE tax is one of the most important parts of managing your income in New Zealand. Whether you’re a full-time employee, part-time worker, student, or someone juggling multiple jobs, PAYE determines exactly how much tax you pay and, ultimately, how much money ends up in your bank account each payday.
Despite being one of the most widely used systems in NZ finance, PAYE remains misunderstood — many Kiwis assume that their payslip automatically sorts everything out behind the scenes, without ever checking whether the correct tax code, student loan deductions, ACC levies, or secondary income adjustments are being applied. In reality, even small mistakes can cost hundreds or thousands per year, especially if you’re on the wrong tax code or have multiple income streams.
With rising living costs, fluctuating tax brackets, and a growing number of Kiwis working flexible or hybrid roles, understanding your take-home pay has never been more important. This guide explains everything you need to know in clear, practical steps — from how PAYE is calculated, to how tax codes work, what affects your net pay, how to fix incorrect deductions, and how voluntary KiwiSaver contributions change your end-of-year financial position. You’ll also find a free PAYE Calculator NZ widget below, allowing you to estimate take-home pay instantly using 2025 tax rates and NZ-specific deductions. Whether you’re comparing salaries, negotiating a new job, budgeting weekly expenses, or trying to understand why your take-home pay seems lower than expected, this ultra-chunky guide gives you every detail needed to confidently manage your NZ income tax obligations.
🧮 PAYE Calculator NZ (2025) – Free Tool
How PAYE Works in New Zealand (Ultra-Chunky Breakdown)
PAYE — Pay As You Earn — is the income tax system that ensures employees in New Zealand have their taxes deducted automatically before receiving their pay. While this sounds simple, the system includes several components that interact with each other: income tax brackets, ACC earners’ levy, tax codes, student loan deductions, KiwiSaver contributions, secondary income adjustments, and employer-based retirement schemes. Misunderstandings in any one of these areas can lead to incorrect deductions, underpayment or overpayment of tax, and in many cases, unexpected bills at the end of the year.
PAYE tax is calculated based on marginal tax brackets, meaning different portions of your income are taxed at different rates. Contrary to popular belief, moving into a higher bracket does not mean all your income is taxed at that higher rate — only the portion above the threshold. Alongside income tax, New Zealand employees also pay the ACC Earners’ Levy, a workplace injury cover deducted from wages at a flat rate. KiwiSaver deductions, while optional, further influence take-home pay, and employer contributions must also be taxed before being added to retirement savings.
A huge number of Kiwis are on the wrong tax code, especially those working multiple jobs. Secondary income is taxed at higher rates by default to prevent underpayment across multiple employers. Understanding which tax code applies to your situation is one of the most important steps toward ensuring accurate PAYE deductions.
For related income topics:
🔗 Salary in New Zealand — https://newzealand-finance.nz/salary-in-new-zealand/
🔗 Minimum Wage NZ 2024 — https://newzealand-finance.nz/minimum-wage-nz-2024/
🔗 Minimum Wage NZ 2025 — https://newzealand-finance.nz/minimum-wage-nz-2025/
PAYE Tax Brackets NZ (2025)
| Income Range | Tax Rate |
|---|---|
| $0 – $14,000 | 10.5% |
| $14,001 – $48,000 | 17.5% |
| $48,001 – $70,000 | 30% |
| $70,001 – $180,000 | 33% |
| $180,001+ | 39% |
ACC Levy Explained (Often Misunderstood)
ACC Earners’ Levy applies to most employees at a flat rate of 1.46% on income up to $142,283. This levy funds personal injury cover for accidents outside of work.
Many Kiwis mistake the ACC levy for additional “tax” — but it is technically an insurance premium.
Tax Codes NZ — Which One Should You Use?
Your tax code determines whether PAYE matches your real tax obligations.
Main job codes:
- M – Main income
- ME – Main income, no student loan
Secondary job codes:
- S – Secondary income
- SB – Secondary + student loan
- SH – Secondary higher tax rate
- ST – Secondary top tax rate
Using the wrong tax code leads to immediate overpayment or underpayment.
Why Your Take-Home Pay Might Seem Wrong
Common reasons:
- Incorrect tax code
- Two jobs being taxed incorrectly
- Student loan deductions misapplied
- KiwiSaver set to wrong percentage
- Employer incorrectly applying ACC
- Changes in salary without tax code update
FAQs — PAYE NZ
1. How is PAYE tax calculated in NZ?
Using progressive tax brackets plus the ACC levy.
2. What does PAYE stand for?
Pay As You Earn.
3. What is the ACC earners’ levy rate?
1.46% on income up to the levy cap.
4. How do I know if I’m on the right tax code?
Check IRD’s tax code finder or compare with job status.
5. Do students pay PAYE?
Yes — plus student loan repayments if applicable.
6. How does a PAYE calculator work?
It applies tax brackets, ACC, and KiwiSaver to your income.
7. Why is my PAYE so high?
You may be on a secondary income tax code.
8. How often is PAYE deducted?
Every payday — weekly, fortnightly, or monthly.
9. Do I pay PAYE on bonuses?
Yes — taxed at your marginal rate.
10. Do I pay PAYE if I’m self-employed?
No — self-employed people pay provisional tax instead.
11. How do I fix an incorrect tax code?
Update your tax code with your employer and IRD.
12. What happens if PAYE is wrong?
You may receive a refund or a tax bill at year-end.
13. Are KiwiSaver contributions taxed?
Your contributions aren’t taxed, but employer ones are.
14. Does PAYE include ACC?
Yes — ACC levy is deducted automatically.
15. Do I pay PAYE on rental income?
No — that’s handled through IR3 tax returns.
16. Does PAYE change each year?
Tax brackets rarely change, but ACC levies may.
17. How much PAYE do I pay at $60k?
Use the calculator — approx $11.5k tax + ACC.
18. Can PAYE be refunded?
Yes — if you overpaid tax during the year.
19. Do casual workers pay PAYE?
Yes — PAYE applies to nearly all employment income.
20. What affects take-home pay?
Tax code, KiwiSaver rate, ACC levy, and gross salary.
