You need to give your employer or payer your tax code so they know how much tax to deduct from your pay, benefit, pension or other taxable payment such as Student Allowance, an ACC compensation payment or paid parental leave.
How income is taxed
Your employer or payer deducts tax from your income when you are paid and then pays your tax to us. You are paid the after-tax amount.
If you pay tax yourself, you work out how much you need to pay at the end of the tax year (31 March) and pay the tax directly to us.
Choosing the right tax code
Your tax code tells your employer or payer how much tax to deduct from your pay, benefit or pension.
There are several tax codes and it’s important to choose the one that’s right for you so you avoid a bill at the end of the tax year 31 March.
You need one tax code for your main or highest source of income. The code you use depends on the type and amount of your main income.
ACC earner levy
All employees must pay an ACC earners' levy to cover the cost of non-work-related injuries. We collect this on behalf of the ACC. The ACC earners’ levy is deducted along with the tax in your PAYE. The current rate is $1.67 for each $100 of income up to $152,791.
Almost all employee earnings for PAYE are liable for the levy which is a set amount.
How PAYE is deducted on your main income
| For each dollar | Tax rate | PAYE deducted |
|---|---|---|
| 0 - $15,600 | 10.5% | 12.17% |
| $15,601 - $53,500 | 17.5% | 19.17% |
| $53,501 - $78,100 | 30% | 31.67% |
| $78,101 - $152,790 | 33% | 34.67% |
| $152,791 - $180,000 | 33% | 33% |
| $180,001 upwards | 39% | 39 % |
Secondary tax codes
If you’re getting taxable income from more than 1 source at the same time, you may need to use a secondary tax code. This is because your extra earnings may have pushed you into a higher tax bracket.
These income sources could include payments such as a pension, ACC, or a Work and Income Benefit.
Each 'layer' of your income is taxed at a different rate. The higher layers are taxed at a higher rate than the lower layers.
Secondary tax codes and rates from 31 July 2024
| Estimated annual total income from all sources | Secondary tax code for the second source of income | Secondary tax rate (before ACC levies) |
|---|---|---|
| 0 - $15,600 | SB | 10.5% |
| $15,601 and $53,500 | S | 17.5% |
| $53,501 and $78,100 | SH | 30% |
| $78,101 and $180,000 | ST | 33% |
| $180,001 and over | SA | 39% |
Up to 30 July 2024
| Secondary tax code | Secondary tax rate |
|---|---|
| SB | 10.5% |
| S | 17.5% |
| SH | 30% |
| ST | 33% |
| SA | 39% |
Work out which tax code to use
Secondary tax codes
Tax code declaration
Our tax code declaration - IR330 has a flowchart on pages 2 and 3 to help you work out the right tax code to use.
You complete the IR330 and give it to your employer or payer. Now they can deduct the right amount of tax from your salary or wage.
Complete my tax code declaration
If you do not give your employer an IR330, they’ll deduct tax from your pay at the non-declaration rate of 45%.
If your tax code changes, you’ll need to give your employer or payer a new IR330.
As an example, you may move from an ‘M SL’ tax code to an ’M’ tax code when you pay off your student loan.
We might change your tax code
If we see that you're using an unsuitable tax code, we may suggest you change it or apply to us for a tailored tax code.
If you're using the wrong tax code, such as using the M tax code on 2 sources of income at the same time, we'll ask your employer or payer to change it. We'll notify you when we do this.
We do this to help you avoid getting a bill at the end of the tax year or to stop you paying more tax than you should during the year.
Talk to us if you disagree with our decision to change your tax code.
Tailored tax options
Tailored tax options help you pay the right amount of tax if your circumstances mean you often have a large tax bill or refund.
Which tailored tax option is right for me?
Apply for a tailored tax code