How income tax works in New Zealand
New Zealand taxes each slice of your income at its own rate, and the ACC levy is added on top.
New Zealand residents pay income tax in slices, called brackets. Only the part of your income inside a bracket is taxed at that bracket's rate. The ACC earners' levy is a separate flat-rate charge that funds accident cover, and it comes out of your pay at the same time.
The tax rates for 2026-27
| Income | Tax rate |
|---|---|
| $0 to $15,600 | 10.5% |
| $15,601 to $53,500 | 17.5% |
| $53,501 to $78,100 | 30% |
| $78,101 to $180,000 | 33% |
| Over $180,000 | 39% |
Worked example: $85,000 a year
10.5% of $15,600 is $1,638.
17.5% of $37,900 is $6,632.50. 30% of $24,600 is $7,380.
33% of the $6,900 above $78,100 is $2,277, making income tax $17,927.50.
The ACC levy is $1,487.50. Take-home pay is $85,000 − $17,927.50 − $1,487.50 = $65,585, about $5,465 a month.
Student loans
If you have a student loan, your employer deducts 12% of every dollar you earn over the repayment threshold. Inland Revenue lists the threshold as $24,128 a year for the 2026 tax year, so on $85,000 the repayment is $7,304.64 a year. Check Inland Revenue for the current threshold.
✨ Key Takeaways
- Each slice of income is taxed at its own rate.
- ACC earners' levy is an extra 1.75% of earnings up to a limit.
- Student loan repayments are 12% of income above the threshold.
- Check Inland Revenue for the current year's figures.