Taxes · New Zealand · 2026/27
Independent earner tax credit: who gets $520 a year
This article was created with artificial intelligence support.
The independent earner tax credit (IETC) takes up to $10 a week, or $520 a year, off the income tax of New Zealand residents earning between $24,000 and $70,000. You get the full amount up to $66,000, and above that it falls by 13 cents for every extra dollar. You cannot get it for a month in which you or your partner receive Working for Families, or you receive an income-tested benefit, NZ Super or a Veteran’s Pension.
How much the credit is worth
The credit is set by income for the whole tax year, from 1 April to 31 March. With an income from $24,000 to $66,000 you get $10 for each week, which is $520 a year. Between $66,001 and $70,000 the credit drops by 13 cents for every dollar above $66,000, so at $68,000 half of it is left and at $70,000 nothing is. Below $24,000 there is no credit at all, so the full $520 starts at exactly that income.
Income here means your before-tax income from every source in the tax year. Salary and wages count, and so do paid parental leave, ACC compensation, interest and other investment income, and self-employment or business income. Losses carried forward from earlier years are not subtracted. A salary of $65,000 with $3,000 of bank interest therefore puts you at $68,000 for the credit.
Who can get it, and what the calculator assumes
You need to be a New Zealand tax resident. You cannot get the credit for a month in which you or your partner are entitled to and receive Working for Families, or in which you receive an income-tested benefit, New Zealand Superannuation, a Veteran’s Pension or an overseas equivalent of any of these. The credit is worked out on whole months, so one payment in a month removes that month’s share.
The calculator cannot check any of these conditions. It gives the credit to everyone whose salary falls in the income band and assumes you qualify for all twelve months. If one of the exclusions applies to you, your take-home pay is lower than the figures below by up to $520 a year.
The credit in take-home pay, 2026/27
The table shows tax, KiwiSaver, take-home pay and the marginal rate on the next $100 of salary under the 2026/27 rates. Take-home pay is $16,542 at $20,000, $20,152 at $24,000 and $32,512 at $40,000. Across the abatement range it is $51,035 at $66,000, $52,070 at $68,000 and $53,105 at $70,000; at $75,000 it is $56,342. The marginal rate at $23,900 is negative because the next $100 brings in the whole credit.
Example assumptions
Annual model estimate
Salary example for a tax resident. Eligibility and actual payment dates may differ.
Salary is the only income, and you qualify for the credit for the whole year: a New Zealand tax resident with no Working for Families, income-tested benefit, NZ Super or Veteran’s Pension. The calculator cannot check these conditions.
Taxes are income tax after the credit plus the ACC earners’ levy of 1.75 percent. Employee contributions are KiwiSaver at the 3.5 percent default rate; no student loan.
- Model year
- 2026/27
- Currency
- NZD
- Age
- 35
- Children
- 0
| Annual gross salary | Taxes | Employee contributions | Annual net pay | Marginal rate, all deductions | Calculator |
|---|---|---|---|---|---|
| NZ$20,000 | NZ$2,758 | NZ$700 | NZ$16,542 | 22.8% | Open these settings |
| NZ$23,900 | NZ$3,509 | NZ$837 | NZ$19,555 | -497.3% | Open these settings |
| NZ$24,000 | NZ$3,008 | NZ$840 | NZ$20,152 | 22.8% | Open these settings |
| NZ$40,000 | NZ$6,088 | NZ$1,400 | NZ$32,512 | 22.8% | Open these settings |
| NZ$66,000 | NZ$12,656 | NZ$2,310 | NZ$51,035 | 48.3% | Open these settings |
| NZ$68,000 | NZ$13,551 | NZ$2,380 | NZ$52,070 | 48.3% | Open these settings |
| NZ$70,000 | NZ$14,446 | NZ$2,450 | NZ$53,105 | 35.3% | Open these settings |
| NZ$75,000 | NZ$16,033 | NZ$2,625 | NZ$56,342 | 35.3% | Open these settings |
How other countries compare
The table shows the marginal rate, all deductions, on a salary of NZ$68,000 converted into each country’s currency, beside the countries New Zealand is most often compared with. The New Zealand figure includes the 13-cent abatement of the credit and KiwiSaver.
| Country | Marginal rate, all deductions | Salary in local currency |
|---|---|---|
| New Zealand | 48.3% | NZ$68,000 |
| Australia | 33.5% | A$54,993 |
| Ireland | 28.7% | €33,997 |
| United Kingdom | 28% | £28,908 |
| United States | 24.9% | $38,161 |
Converted at the exchange rates of 2 October 2026. Each country uses the calculator’s default profile and its latest enacted tax year. Living costs are not compared.
What the abatement does to a pay rise
Income from $53,501 to $78,100 is taxed at 30 percent. Inside the abatement range each extra dollar also removes 13 cents of credit, so income tax on it is effectively 43 percent. Add the 1.75 percent ACC earners’ levy and KiwiSaver at 3.5 percent and the calculator shows a marginal rate of 48.3% at $66,000 and $68,000. Moving from $66,000 to $70,000 raises the tax column by $1,790: $1,200 at 30 percent, $520 as the credit runs out and $70 of ACC levy. Of the $4,000 pay rise you keep $2,070.
Once the credit is gone the marginal rate falls back to 35.3%, the same at $70,000 and $75,000. Further down, at $40,000, it is 22.8%: 17.5 percent income tax plus the levy and KiwiSaver.
The $24,000 threshold is a step
The credit does not phase in. One dollar below $24,000 you get nothing, and at $24,000 you get the full $520. At $23,900, the next $100 of salary adds $597 to take-home pay in the calculator. Across the range from $20,000 to $24,000, the extra $4,000 of salary adds $3,610 of take-home pay, $520 of it from the credit. If your income is close to $24,000, a few extra hours or a small amount of interest can decide whether you get the credit for the year.
The July 2024 change and the 2024/25 tax year
Until 30 July 2024 the full credit stopped at $44,000 and nothing was left at $48,000. The Taxation (Budget Measures) Act 2024 moved those points to $66,000 and $70,000 from 31 July 2024, while the $24,000 starting point and the $520 maximum stayed the same.
Because the change came part way through the 2024/25 tax year, which IRD calls the 2025 tax year, the credit for that year is worked out in two parts: the old thresholds for 121 days and the new ones for 244 days, each as a share of 365. In IRD’s example, an income of $45,000 gives $390 under the old settings and $520 under the new ones, so the credit for the year is $476.90. The calculator’s 2024/25 year uses the same split, which is why incomes above $44,000 got less than $520 that year. From 1 April 2025 the new thresholds apply for the whole year.
Claiming it through your tax code or after the year ends
If you have one job and expect to earn between $24,000 and $70,000, fill in a Tax code declaration (IR330) with tax code ME, or ME SL if you have a student loan, and give it to your employer before your next payday. The credit then reduces the tax taken from each pay. With more than one job, ME goes on your main job when it pays more than $24,000 and your total income is in the band. If your main job pays less than $24,000 but your total income is in the band, you can wait for the end of the year or apply for a tailored tax code.
After 31 March IRD sends you an income tax assessment. If you qualified but did not get the credit during the year, it is paid then; if you got too much or too little through your tax code, you get a refund or have tax to pay. A new job means a new IR330: choose ME again if you still qualify, or M or M SL if the new salary takes you past $70,000.
Before you choose your tax code
- Add up your expected before-tax income for the tax year from every source, including interest and self-employment income.
- Check that neither you nor your partner receives Working for Families, and that you get no income-tested benefit, NZ Super or Veteran’s Pension.
- If you qualify, give your employer an IR330 with tax code ME, or ME SL with a student loan, for your main job.
- Switch to tax code M or M SL when a pay rise or new job takes your income past $70,000.
See your own numbers
The articles use example figures. Enter your salary in the calculator to see your own result.
Sources and model coverage
What the estimate covers
The calculator estimates employment income using its supported country rules and selected inputs. Benefits, collective agreements and personal circumstances that are not modelled are excluded. Official rules determine your actual liability.
Official sources
- Inland Revenue – Independent earner tax credit (IETC)
- Inland Revenue – Getting the independent earner tax credit if you earn salary or wages
- Inland Revenue – Special report: Taxation (Budget Measures) Act 2024, independent earner tax credit (pp. 11–14)
- Inland Revenue – Tax rates for individuals
- Inland Revenue – Tax codes for individuals and the ACC earners’ levy
- Inland Revenue – KiwiSaver changes from 1 April 2026