NZ tax for employees: what actually comes out of your pay

New Zealand's tax system for employees is administered largely by your employer through PAYE (Pay As You Earn). Understanding the basics helps you check your pay is correct, choose the right tax code, and know when you need to do something proactive.

How PAYE works

When you're employed, your employer deducts income tax and ACC levies from every pay before you receive it, then pays that to IRD on your behalf. This means most employees don't need to file a tax return — your tax is handled automatically.

The tax rate you pay is progressive: lower income is taxed at lower rates, higher income at higher rates. The first $14,000 of income is taxed at 10.5%, income between $14,001 and $48,000 at 17.5%, between $48,001 and $70,000 at 30%, and above $70,000 at 33%.

Tax codes: why they matter

Your tax code tells your employer what rate to withhold. The most common codes are:

• M — main job with no student loan
• M SL — main job with a student loan
• S — secondary job (taxed at a flat rate)
• SB — secondary job earning less than $14,000

Using the wrong tax code — particularly if you have a secondary job and don't use the S code — can lead to a significant tax bill at year end. Check your code matches your situation.

The tax refund (or bill) at year end

IRD runs an automatic income tax assessment each year for most employees. If you overpaid, you'll receive a refund (typically in May/June). If you underpaid — for example, because you had multiple income sources or didn't update your tax code — you'll have a bill to pay.

You can see your assessment in myIR (IRD's online portal). If you received a Working for Families tax credit, have rental income, or are self-employed at all, you may need to complete a more detailed return.

ACC levies: the other deduction

Alongside income tax, you'll see an ACC deduction on your pay slip. This is the earner levy for New Zealand's accident compensation scheme, which provides no-fault coverage for injuries. The rate changes annually — in 2026, it's $1.39 per $100 of earnings, up to a threshold of around $139,000.

What takes home pay actually looks like

A rough guide for 2026 (after PAYE and ACC, before KiwiSaver):

• $50,000 gross → approximately $41,500 take-home per year ($1,596/fortnight)
• $70,000 gross → approximately $55,000 take-home per year ($2,115/fortnight)
• $90,000 gross → approximately $68,000 take-home per year ($2,615/fortnight)
• $100,000 gross → approximately $74,000 take-home per year ($2,846/fortnight)

KiwiSaver contributions (at 3%) reduce take-home by approximately $1,500 for every $50,000 of income.