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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 your pay and extra earnings”

The Basic tax rates for PAYE income payments schedule outlines how tax is calculated for different types of salary and wage payments. Here’s what you need to know:

For weekly pay periods, your employer uses a tax table based on your tax code (M or ME) to work out how much tax to deduct. For pay periods longer than a week, they use a formula that takes into account the weekly portion of your pay.

If you haven’t told your employer your tax code, they’ll deduct tax at 45 cents for every dollar you earn.

For secondary jobs, there are different tax rates depending on which tax code you use:

  • S code: 17.5 cents per dollar
  • SH code: 30 cents per dollar
  • ST code: 33 cents per dollar
  • SA code: 39 cents per dollar

There are also special tax codes for casual agricultural workers, election day workers, and non-resident seasonal workers. These have different tax rates.

For extra pay like bonuses, there’s a table that shows what tax rate to use based on your circumstances and how much you’ve earned so far that year.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

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 various types of income and benefits in New Zealand”

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Schedule 3: Payment of provisional tax and terminal tax, or

“When to pay your estimated and final income tax”

2Basic tax rates for PAYE income payments

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 $14,000 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).