PAYE and the Levy Beside It
New Zealand deducts income tax through PAYE across five bands, and alongside it an ACC earners’ levy that funds the accident compensation scheme. The levy is easy to overlook because it is not income tax, but it applies from the first dollar and is a real reduction in take-home pay.
This calculator applies both, showing tax and levy separately against your gross income.
How to Calculate Your Take-Home Pay
One input covers the core calculation; the details below explain what comes out of it.
- Enter your gross annual income before any deductions.
- Read the PAYE figure, which is income tax across the five bands.
- Read the ACC earners’ levy separately. It is charged at 1.75% on income up to a cap, and is not income tax.
- Check your effective rate against your top band. The effective rate is always lower, because the bands beneath are charged at their own lower rates.
- Note that KiwiSaver contributions and student loan repayments are not included and will reduce your take-home further.
How Progressive Bands Actually Work
Moving into a higher band does not reapply that rate to your whole income. Only the portion above the threshold is taxed at the higher rate, so a pay rise never leaves you worse off overall, a belief that persists despite being arithmetically impossible under a progressive system.
That is why the effective rate matters more than the top band. Someone earning $80,000 is in the 30% band but pays an effective income tax rate well below that, because the first $15,600 is taxed at 10.5% and the next tranche at 17.5%. The gap between marginal and effective rate widens the further into a band you sit.
PAYE Bands and the ACC Levy
The rates this calculator applies to annual income.
| Income band | PAYE rate | ACC earners’ levy |
|---|---|---|
| Up to $15,600 | 10.5% | 1.75% |
| $15,600 – $53,500 | 17.5% | 1.75% |
| $53,500 – $78,100 | 30% | 1.75% |
| $78,100 – $180,000 | 33% | 1.75% |
| Above $180,000 | 39% | 1.75% up to $156,641 |
The ACC levy applies at a flat 1.75% but only on income up to $156,641, so it stops increasing above that point. Unlike income tax it has no tax-free threshold, which is why even a low income sees a levy deduction from the first dollar.
What Is Not Included
KiwiSaver contributions come out of take-home pay at your chosen rate and are not shown here, nor is the employer contribution that sits alongside them. Student loan repayments, currently deducted above a repayment threshold, are also excluded, as is the Independent Earner Tax Credit for those who qualify.
These are estimates for general guidance rather than a payroll calculation. Rates and thresholds change with the tax year, secondary tax codes apply to a second job, and anyone with self-employed income has obligations this does not cover. Inland Revenue’s own calculators or an accountant are the right source where the figure has consequences.
The tax code on your payslip is worth checking against your circumstances. Using the wrong one is a common cause of over- or under-payment across a year, and a secondary code on a second job withholds at a flat higher rate that often does not match what you actually owe. Where the codes are wrong, the difference is settled at the end of the tax year rather than as you go.