Secondary Tax
If you have more than one job or income source, your secondary employer deducts tax using a secondary tax code. Secondary tax codes are designed to collect tax at your correct marginal rate, since your primary job income has already used up your lower tax brackets.
Common secondary tax codes include: SB (income up to $15,600), S (income $15,601–$53,500), SH (income $53,501–$78,100), ST (income $78,101–$180,000), and SA (income over $180,000). The appropriate code depends on how much you expect to earn from the secondary job.
Secondary tax is not an additional or higher tax — it simply ensures the right amount of tax is collected across both jobs so you don't get a surprise tax bill at year end. If the wrong code is used, it will be corrected in your end-of-year assessment. Since 2021, the 'tailored tax code' system allows more precise deduction rates for people with multiple jobs.
How it works
Secondary codes exist because your two employers can't see each other's payroll. If both your main job and a second job independently used the main 'M' code, each would apply the lower tax brackets to its own portion of your pay as if that job were your only income — under-collecting tax across your combined earnings. Secondary codes instead assume your primary job has already used up the lower brackets, so the secondary employer withholds starting from roughly where your primary income leaves off.
Beyond the standard SB/S/SH/ST/SA bands, a tailored tax code (available since 2021) lets you apply to IRD through myIR for a rate calculated specifically for your actual combined income mix, rather than picking the closest standard band — useful if your income sources or amounts change often and the standard bands don't fit well.
The common misconception is that a second job is taxed at a punitive extra rate. It isn't — the secondary code simply starts taxing your second income from a higher assumed point in the brackets, because your first job is assumed to already be using the lower ones, so total tax collected across both jobs during the year lands close to what you'd actually owe on your combined income, rather than under-collecting the way two independent 'M' codes would.
Example: why secondary tax isn't 'extra' tax
Suppose you earn $50,000 from your main job and $20,000 from a second job — $70,000 combined for the year.
If both employers used the main 'M' code and taxed their portion independently starting from the 10.5% bracket, total PAYE collected would be about $7,658 (main job) + $2,408 (second job) = $10,066.
But the correct income tax on $70,000 combined, calculated once across the full progressive brackets, is about $13,220.50.
Using a secondary tax code on the second job — rather than 'M' — closes most of that roughly $3,154.50 gap during the year, by taxing the secondary income at a rate closer to what it actually adds on top of your main job, not by charging you extra tax overall.
Frequently asked questions
Does having a second job mean I pay more tax overall than if it were my only job?
No — your total income tax liability is exactly the same whether you earn a given amount from one job or split across two; secondary tax codes are designed to collect roughly the right total during the year, and any mismatch is corrected in your end-of-year income tax assessment.
How do I know which secondary tax code to use?
The code depends on how much you expect to earn from your secondary job for the year — SB, S, SH, ST, or SA correspond to increasing income bands, or you can apply for a tailored tax code through myIR for a more precise rate.
What if my secondary tax code doesn't exactly match what I actually owe?
It's corrected automatically — any shortfall or overpayment across your combined income from all jobs is reconciled in your end-of-year income tax assessment, the same way any other PAYE mismatch is handled.
Related Terms
Tax Code
A tax code is a code you provide to your employer (on an IR330 form) that determines how PAYE is calculated on your pay.
PAYE
PAYE (Pay As You Earn) is the system that New Zealand employers use to deduct income tax from employees' wages and salaries.
Marginal Tax Rate
Your marginal tax rate is the tax rate that applies to your next (or last) dollar of income — in other words, the rate of the highest tax bracket you fall into.
Extra Pay
Extra pay is IRD's category for one-off payments outside your regular salary or wages — bonuses, backpay, retiring or redundancy payments, cashed-up annual leave, and similar lump sums.
Try the calculator
Use our free tool to see how secondary tax affects your tax.