NZ Tax Codes 2025: Complete Guide to PAYE Calculator and Take-Home Pay Impact

Understanding New Zealand tax codes is essential for maximizing your take-home pay and avoiding unexpected tax bills. With the right tax code, you can ensure accurate PAYE deductions and avoid both underpaying and overpaying tax throughout the year.

Primary Tax Codes (Main Job)

M - Main Job Tax Code

• For your primary source of income

• Gets the full tax-free threshold benefit

• Most common code for salaried employees

• Cannot be used for multiple jobs simultaneously

ME - Main Job with Tax Relief

• For annual income between $24,000-$48,000

• Provides $10 per week tax relief ($520 annually)

• Cannot receive income-tested benefits

• Ideal for part-time workers and students

M SL - Main Job with Student Loan

• Same as M code but includes student loan deductions

• 12% deduction on income above $24,128 annually

• Must be used if you have a student loan

• Essential for accurate student loan repayments

Secondary Tax Codes

S - Secondary Tax Code

• 17.5% flat rate

• For income up to $70,000 from all sources

• Use for second jobs or additional income

• No tax-free threshold

SH - Secondary Higher Rate

• 30% flat rate

• For combined income $70,001-$180,000

• Higher rate to account for tax brackets

• Prevents large end-of-year tax bills

ST - Secondary Top Rate

• 33% flat rate

• For combined income over $180,000

• Highest secondary rate

• For high-income earners

STC - Secondary Top + 39%

• 39% flat rate

• For combined income over $180,000

• Alternative to ST for very high earners

• Matches top marginal rate

Tax Code Impact Examples

Example 1: Single Job - $60,000 Salary

M Code (Correct)

• Annual tax: $8,920

• Take-home: $51,080

• Weekly: $982

S Code (Wrong!)

• Annual tax: $10,500

• Take-home: $49,500

• Weekly: $951

• Loss: $31/week

Example 2: Two Jobs - $40,000 + $20,000

Job 1 (Main): M code on $40,000

Job 2 (Secondary): S code on $20,000

• Combined annual tax: $8,920

• Total take-home: $51,080

• Effective rate: 14.9%

Special Situations

Student Loan Considerations

Primary job: Use M SL

Secondary job: Use S SL, SH SL, or ST SL

Critical: SL codes ensure correct deductions

Without SL: Risk year-end tax debt

Common Mistakes

• Using M for multiple jobs

• Wrong secondary code rate

• Forgetting student loan codes

• Not updating after job changes

How to Choose the Right Tax Code

Decision Tree

1. Is this your main/only job? → Use M (or ME if eligible)

2. Do you have a student loan? → Add SL to your code

3. Is this a second job? → Use S, SH, or ST based on total income

4. Combined income under $70,000? → Use S

5. Combined income $70,000-$180,000? → Use SH

6. Combined income over $180,000? → Use ST

Using Tax Code Calculators

Information You Need

• Total annual income from all sources
• Student loan status
• Number of jobs/income sources
• Benefit entitlements

Calculator Benefits

• Compare different tax code scenarios
• Estimate accurate take-home pay
• Avoid year-end tax surprises
• Optimize your tax position

Conclusion

Choosing the correct tax code is crucial for accurate PAYE deductions and maximizing your take-home pay. Using the wrong code can result in significant overpayment during the year or unexpected tax bills.

Use our PAYE calculator to compare different tax codes and ensure you're using the most appropriate code for your situation.