How much of a pay rise do you keep in NZ? (2026/27)

A pay rise is taxed only at your marginal rate, the rate on your top dollars, so it never lowers your take-home pay. In the 2026/27 tax year, with KiwiSaver at 3.5% and no student loan, a $5,000 rise is worth between $2,875 and $3,862 a year in your pocket depending on your salary. A student loan takes another 12 cents of each extra dollar. The sharpest squeeze is on the ME tax code between $66,000 and $70,000, where you keep about 52 cents in the dollar.

Your marginal rate decides what you keep

New Zealand income tax is charged in slices. Each rate applies only to the income inside its bracket, so a rise is taxed at the rate of the bracket your extra dollars land in, not your whole salary. On top of income tax, each extra dollar of pay carries the ACC earners' levy (1.75% in 2026/27, up to $156,641 of earnings), any student loan deduction (12% above $24,128 a year) and your KiwiSaver deduction.

Each "kept" figure is the change in yearly take-home for a $1,000 rise inside that band (from $10,000, $30,000, $60,000, $100,000, $160,000 and $200,000), on the M code, worked out with this site's engine. In the lowest band a student loan makes no difference because income is under the repayment threshold. Brackets: IRD's tax rates for individuals page and the 2026/27 payroll specification. Your KiwiSaver deduction is still your money, saved for later; the table counts it as not in your pocket today.

Why a pay rise never lowers your take-home pay

The worry that a rise could "push you into a higher bracket" and leave you worse off comes from imagining the higher rate applying to your whole salary. It does not. Every part of the 2026/27 system works on the margin:

• Income tax charges the higher rate only on dollars above each threshold. The highest rate is 39%.
• ACC levy is a flat 1.75%, and stops once earnings reach $156,641 (maximum levy $2,741.22).
• Student loan is 12% only of pay above the threshold ($928 a fortnight, $24,128 a year).
• The independent earner tax credit (ME code) tapers off at 13 cents per dollar between $66,000 and $70,000. It does not vanish in one step.

Add up the worst case, ME with a student loan in the taper zone: 30% tax, 1.75% levy, 13% lost credit, 12% student loan and 3.5% KiwiSaver. That is 60.25 cents of each extra dollar, leaving you about 40 cents. You still come out ahead. We checked this with the engine: stepping through salaries every $250 from $20,000 to $250,000 on M SL, and every $100 from $60,000 to $72,000 on ME, take-home pay rose at every step.

Two things that can feel like a loss are not caused by PAYE: income-tested support such as Working for Families, and a one-off back pay lump sum taxed at a higher extra pay rate (see bonuses, back pay and holiday pay).

A $5,000 rise at five salaries, without a student loan

These figures are for a full 2026/27 tax year on the M tax code, with KiwiSaver at 3.5%, from this site's engine.

Where the $5,000 goes in each case:

• $45,000: income tax $874.64, ACC levy $87.88, KiwiSaver $175. All of it stays in the 17.5% bracket.
• $60,000: income tax $1,500.20, levy $86.84, KiwiSaver $175. All in the 30% bracket.
• $75,000: income tax $1,556.88, levy $87.88, KiwiSaver $175. The first $3,100 is taxed at 30% and the rest at 33%, because the bracket changes at $78,100.
• $100,000: income tax $1,649.96, levy $87.36, KiwiSaver $175.
• $180,000: income tax $1,950.00 (39% on all of it, as $180,000 is the top of the 33% bracket), no levy because earnings are already over $156,641, KiwiSaver $175.

Your employer also adds a compulsory KiwiSaver contribution of at least 3.5% on the rise, $175 a year before employer superannuation contribution tax (ESCT). Run your own numbers in the PAYE calculator.

The same rises with a student loan

A student loan adds 12% of each extra dollar once you are above the threshold, which every salary here is. So $600 of each $5,000 rise goes to your loan. The 2026/27 figures on the M SL code, with KiwiSaver at 3.5%:

The extra $600 is not lost: it pays your loan down faster, so the loan ends sooner. If you want to see the split for your own pay, the KiwiSaver and student loan guide explains each deduction.

The ME code edge between $66,000 and $70,000

The ME code gives you the independent earner tax credit (IETC) through your pay: $520 a year ($10 a week) if your income is $24,000 to $66,000. Above $66,000 it reduces by 13 cents for each extra dollar, reaching nil at $70,000 (IRD's IETC page; 2026/27 payroll specification s5.3). You can use ME only if you are a New Zealand tax resident, your income is in that range, neither you nor your partner is entitled to Working for Families, and you are not receiving a main benefit, NZ Super or a Veteran's pension.

In the taper zone the 13 cents stacks on top of 30% tax and the 1.75% levy. Here is a $5,000 rise from $65,000 to $70,000 in 2026/27, KiwiSaver 3.5%, no student loan:

The ME earner starts $520 ahead and ends level, so the rise is worth $520 less to them. Inside the taper, each extra $1,000 keeps about $517 on ME (from $66,000 to $67,000: $517.28), against about $648 on M. With a student loan as well, a rise from $67,000 to $68,000 on ME SL keeps $397.80.

What to do: if a rise will take your income for the year to $70,000 or more, the credit is gone, so move from ME to M (or ME SL to M SL) with a new IR330. Our tax codes guide covers how.

Two more edges: the ACC cap and the 39% bracket

The ACC levy cap at $156,641. Once your earnings pass $156,641 in 2026/27, no more levy is deducted, so your marginal deduction drops from 34.75% to 33% until $180,000. On the M code with KiwiSaver at 3.5%, a $5,000 rise keeps:

The 39% bracket from $180,001. Only the dollars above $180,000 are taxed at 39%. With no levy above the cap, you keep 57.5% of a rise there with KiwiSaver at 3.5%, or 45.5% with a student loan.

Employer KiwiSaver. The ESCT rate on your employer's contributions is set from your previous tax year's salary or wages plus the employer's gross contributions, and stays fixed for the whole tax year (2026/27 payroll specification s5.20). A rise during the year does not change it until the next tax year.

When the rise reaches your pay

PAYE is worked out pay by pay, from that pay's gross amount annualised. So from the first pay at your new rate, the deductions adjust automatically. You do not need to file anything because of the rise.

Check three things:

1. Back pay. If the rise is backdated and the catch-up is paid as a lump sum, it is taxed as an extra pay at your marginal rate on the last 4 weeks annualised plus the lump sum. Try it in the bonus tax calculator.
2. Your tax code. ME stops paying off at $70,000, and if you have a second job, a higher main salary can move the right secondary code up a band. See secondary tax.
3. Your KiwiSaver rate. A rise is a natural time to reconsider your rate (3.5%, 4%, 6%, 8% or 10% in 2026/27). See choosing a KiwiSaver rate.

When you are negotiating, compare offers in take-home terms. Enter both salaries in the PAYE calculator with your tax code, student loan and KiwiSaver rate, and look at the difference per pay, not the headline figure.

Questions people ask

Can a pay rise put me in a higher tax bracket and leave me worse off?

No. Only the dollars above each threshold are taxed at the higher rate. The ACC levy is flat, student loan is 12% above a threshold, and the ME credit tapers at 13 cents per dollar, so take-home pay always rises.

How much of a $5,000 pay rise will I keep?

In 2026/27 on the M code with KiwiSaver at 3.5%: about $3,862 a year at $45,000, $3,238 at $60,000, $3,180 at $75,000, $3,088 at $100,000 and $2,875 at $180,000. A student loan takes $600 more of each rise.

Why do I keep less of a rise between $66,000 and $70,000?

If you use the ME code, the $520 independent earner tax credit reduces by 13 cents per dollar over $66,000 and is nil at $70,000. On top of 30% tax and the 1.75% levy, that leaves about 52 cents of each extra dollar with KiwiSaver at 3.5%.

Do I need to change my tax code after a pay rise?

Only in some cases: if you are on ME and your income for the year will be $70,000 or more, or if your second job's secondary code no longer matches your total income. Otherwise PAYE adjusts automatically.