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Income Tax Act 2007

Schedule 2: Basic tax rates for PAYE income payments

You could also call this:

"Tax rates for the money taken from your pay"

Illustration for Income Tax Act 2007

When you get paid, your employer takes out some money for taxes. The amount of tax you pay depends on your tax code. You tell your employer what tax code to use. If you use the M or ME tax code, the tax rate is found using a special table.

If you get paid every week, the tax rate is looked up in the table. If you get paid less often than every week, the tax rate is calculated using a formula. The formula works out how much you would have been paid if you got paid every week.

There are different tax codes, like S, SH, ST, and others. Each tax code has its own tax rate. For example, if you use the S tax code, the tax rate is 0.175 for each dollar you earn. If you use the SH tax code, the tax rate is 0.300 for each dollar you earn.

Sometimes you might get extra pay, like a bonus. In that case, the tax rate is found using a different table. The table says what tax rate to use depending on the situation. You find the situation that applies to you in one column, and then you find the tax rate in another column.

You can find more information about tax codes and tax rates in the Tax Administration Act 1994. You can also look at section RD 10 and section RD 17 to see when to use each tax rate.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1523232.

Topics:
Money and consumer rights > Taxes
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Schedule 1: Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits, or

"Tax rates for the money you earn from jobs and investments"

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"Paying tax during and after the year: provisional and terminal tax explained"

2Basic tax rates for PAYE income payments Empowered by ss RD 9–RD 11, RD 13, RD 17, YA 1

Part ASalary or wages

1M and ME tax codes: payments for weekly pay periods

  1. The basic tax rate amount for a payment of salary or wages is set by applying the Commissioner’s weekly PAYE table to the amount, using the employee’s tax code, if—

  2. the payment is for a weekly pay period (including the case of section RD 3 applying); and
    1. the employee has notified their employer that the employee’s tax code is M or ME under section 24B(3) of the Tax Administration Act 1994.

      Notes
      • Schedule 2 part A clause 1 heading: amended, on , by section 8(1)(a) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
      • Schedule 2 part A clause 1(b): amended, on , by section 8(1)(b) of the Taxation (Budget Measures) Act 2012 (2012 No 38).

      2M and ME tax codes: payments for pay periods longer than a week

      1. If an employee has notified their employer that the employee’s tax code is M or ME referred to in schedule 5, part A, clause 4, row 1 of the Tax Administration Act 1994, and the payment of salary or wages is for a pay period longer than a week, then the basic tax rate amount for the payment is calculated using the formula—

        (total payment ÷ weekly portion of payment) × weekly PAYE table amount.

        Where:

        • total payment means the payment of salary or wages to which this clause applies:
          1. weekly portion of the payment means the portion of the payment that is attributable to the part of the pay period that is for a week if it is assumed that the payment accrued at a uniform daily rate throughout the pay period:
            1. weekly PAYE table amount means the amount that results from applying the Commissioner’s weekly PAYE table to the weekly portion of the payment (described in paragraph (b)) using the employee’s tax code, as if the weekly portion is a payment for a weekly pay period.

              Notes
              • Schedule 2 part A clause 2 heading: amended, on , by section 8(2)(a) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
              • Schedule 2 Part A clause 2: amended, on , by section 252(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Schedule 2 part A clause 2: amended, on , by section 8(2)(b) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
              • Schedule 2 part A clause 2 formula: substituted (with effect on 1 April 2008), on , by section 123(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).

              3Non-notified tax code

              1. If an employee’s tax code is a non-notified tax code under section 24E of the Tax Administration Act 1994, the basic tax rate amount for a payment of salary or wages is set by applying the rate of 0.45 for each dollar of the payment.

              Notes
              • Schedule 2 Part A clause 3: replaced, on , by section 252(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).

              4S tax code

              1. If an employee has notified their employer that the employee’s tax code is S under section 24C of the Tax Administration Act 1994, the basic tax rate amount for a payment of secondary employment earnings is set by applying the rate of 0.175 for each dollar of the payment.

              Notes
              • Schedule 2 Part A clause 4: amended, on , by section 252(5) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Schedule 2 part A clause 4: amended, on , by section 36(a) of the Taxation (Budget Measures) Act 2010 (2010 No 27).

              5SH tax code

              1. If an employee has notified their employer that the employee’s tax code is SH under section 24C of the Tax Administration Act 1994, the basic tax rate amount for a payment of secondary employment earnings is set by applying the rate of 0.300 for each dollar of the payment.

              Notes
              • Schedule 2 Part A clause 5: amended, on , by section 252(5) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Schedule 2 part A clause 5: amended, on , by section 36(b) of the Taxation (Budget Measures) Act 2010 (2010 No 27).

              6ST tax code

              1. If an employee has notified their employer that the employee’s tax code is ST under section 24C of the Tax Administration Act 1994, the basic tax rate amount for a payment of secondary employment earnings is set by applying the rate of 0.330 for each dollar of the payment.

              Notes
              • Schedule 2 Part A clause 6: amended, on , by section 252(5) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Schedule 2 part A clause 6: amended, on , by section 36(c) of the Taxation (Budget Measures) Act 2010 (2010 No 27).

              6B“SA” tax code

              1. If an employee has notified their employer that the employee’s tax code is “SA” under section 24C of the Tax Administration Act 1994, the basic tax rate amount for a payment of secondary employment earnings is set by applying the rate of 0.390 for each dollar of the payment.

              Notes
              • Schedule 2 part A clause 6B: inserted, on , by section 23 (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).

              7CAE or EDW tax code

              1. If an employee has notified their employer that the employee’s tax code is CAE or EDW under section 24C of the Tax Administration Act 1994, the basic tax rate amount for a payment for employment as a casual agricultural employee or an election day worker (as applicable) is set by applying the rate of 0.175 for each dollar of the payment.

              Notes
              • Schedule 2 Part A clause 7: amended, on , by section 252(5) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Schedule 2 part A clause 7: amended, on (with effect on 1 April 2008), by section 252(6) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Schedule 2 part A clause 7: amended, on , by section 36(d) of the Taxation (Budget Measures) Act 2010 (2010 No 27).

              8NSW tax code

              1. If an employee has notified their employer that the employee's tax code is NSW under section 24C of the Tax Administration Act 1994, the basic tax rate amount for a payment for employment as a non-resident seasonal worker is set by applying the rate of 0.105 for each dollar of the payment.

              Notes
              • Schedule 2 Part A clause 8: amended, on , by section 252(5) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Schedule 2 part A clause 8: amended, on (applying for the 2011–12 and later income years), by section 137(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
              • Schedule 2 part A clause 8: added, on , by section 578 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

              9“SB” tax code

              1. If an employee has notified their employer that the employee's tax code is SB under section 24C of the Tax Administration Act 1994, the basic tax rate amount for a payment of secondary employment earnings is set by applying the rate of 0.105 for each dollar of the payment.

              Notes
              • Schedule 2 Part A clause 9: amended, on , by section 252(7) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Schedule 2 part A clause 9: amended, on , by section 36(e) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
              • Schedule 2 part A clause 9: added, on (applying for the 2010–11 and later income years), by section 123(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).

              Part BExtra pays

              Table 1

              The following table is small in size and has 3 columns. Column 1 is headed Row. Column 2 is headed Condition. Column 3 is headed Tax rate.
              Row Condition Tax rate
              1

              Section RD 10(2C) applies.

              		0.105
              2

              Section RD 17(2)(a) applies and the sum is $15,600 or less.

              		0.105
              3

              Section RD 10(2)(a) or RD 17(2)(b) applies.

              		0.175
              4

              Section RD 10(2)(b) or RD 17(2)(c) applies.

              		0.300
              5

              Section RD 10(2)(c) or RD 17(2)(d) applies.

              		0.330
              6

              Section RD 10(2)(d) or RD 17(2)(e) applies.

              		0.390
              7

              Section RD 10(2D) applies.

              		0.450

               

              How to use this table:

              Find the applicable condition in the second column, in order to find the relevant rate to apply, in the third column.

              Notes
              • Schedule 2 part B table 1: replaced, on , by section 24 (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
              • Schedule 2 part B table 1 row 2: amended, on , by section 38(1) (and see section 38(2) for application) of the Taxation (Budget Measures) Act 2024 (2024 No 19).