How PAYE Works in New Zealand
A complete guide to the PAYE (Pay As You Earn) system in New Zealand — tax codes, how deductions are calculated, and what to do if you pay too much or too little tax.
Published 22 February 2026
PAYE — Pay As You Earn — is the system New Zealand employers use to collect income tax from employees. It means most employees never need to file a tax return.
How PAYE Works
- You provide your tax code to your employer (via an IR330 form)
- Your employer deducts the correct amount of tax from each pay
- Employer pays IRD on your behalf (usually monthly)
- IRD reconciles your tax at year end via automatic assessment
Tax Codes
Your tax code tells your employer which rate to use. Common codes:
| Code | When to use |
|---|---|
| M | Main/only job |
| M SL | Main job + student loan |
| S | Secondary job ($14,001–$48,000 range) |
| SB | Secondary job (under $14,000) |
| SH | Secondary job ($48,001–$70,000 range) |
| ST | Secondary job ($70,001–$180,000 range) |
| CAE | Casual agricultural employee |
| No-notification | If no code provided (highest rate) |
Always provide your tax code to avoid being overtaxed.
What if You Pay Too Much Tax?
IRD will issue a tax assessment after the end of the tax year showing whether you’ve overpaid or underpaid. If you’ve overpaid, IRD will refund the difference (usually automatically to your bank account). You can also proactively check through myIR.
What if You Pay Too Little Tax?
If you earn income not subject to PAYE (e.g. rental income, self-employment), or use the wrong tax code, you may underpay tax. You may need to file an IR3 tax return and pay any shortfall, plus use-of-money interest.
Secondary Employment
If you have two jobs, each employer deducts PAYE separately. You must give your secondary employer an appropriate secondary tax code so the right marginal rate applies to that income.
Use our Take-Home Pay Calculator to see your PAYE deductions.