Working while studying in NZ: tax codes, student loan and allowance

It depends on whether you get a student allowance. For PAYE the allowance counts as your main income, so a part-time job must use a secondary code such as SB SL or S SL, and 12% comes off every dollar for your student loan. If you have no allowance and one job, you use M SL, and nothing goes to the loan in any week you earn $464 or less (2026/27). Separately, StudyLink reduces your allowance cent for cent once you earn more than $284.70 in a week.

Which tax code a working student uses

A student allowance is taxable income, and Inland Revenue treats it as a main source of income. The IR335 Employer's guide says: "If an employee is already using a main tax code for another job, taxable pension, main benefit or student allowance, they must choose a secondary tax code for any other employment."

To pick the secondary code, add up everything you expect to receive in the tax year (1 April 2026 to 31 March 2027): your allowance plus your earnings from every job. The code matches the band that total falls in. Most students land in SB or S. The secondary rates for 2026/27, including the 1.75% ACC earners' levy, are:

The secondary tax guide explains why these flat rates exist, and the secondary tax calculator works out your pay on each code.

How student loan deductions work in 2026/27

The repayment rate is 12% and the annual repayment threshold is $24,128, the same figure since 1 April 2024. IRD: "The amount you have to pay to your student loan each year is 12% of every dollar you earn over the repayment threshold" (Repaying my student loan).

On a main code (M SL or ME SL), the threshold is applied each pay, not over the year. You pay 12% of whatever you earn above:

So a week at $464 or less has no loan deduction, but a big week over $464 does, even if your income for the whole year ends up under $24,128.

On a secondary code (SB SL, S SL and so on), there is no threshold: "The repayment threshold does not apply to secondary jobs." 12% comes off every dollar. That is why a student on an allowance sees a loan deduction from their first hour of work.

Worked examples: a 15-hour week

Take a student working 15 hours a week at the 2026/27 adult minimum wage of $23.95, paid weekly: $359.25 gross. No KiwiSaver in these examples.

Without an allowance, $359.25 is under the $464 weekly threshold, so nothing goes to the loan. With an allowance, the job is secondary and $43.08 (12%) goes to the loan every week. That money is not lost: it reduces your loan balance. But it does come out of your weekly budget.

A smaller job of 8 hours a week ($191.60) on SB SL has PAYE of $23.39 and a loan deduction of $22.92, leaving $145.29.

If your total income will end up over $15,600 but you choose SB, too little tax is taken and you may owe tax at the end of the year. If the secondary code takes too much, a tailored tax code may help: see two jobs and tailored tax codes.

Cutting the loan deduction: the special deduction rate and the exemption

Two IRD tools stop you over-repaying while you study. Both are applied for in myIR.

Special deduction rate (SDR). The IR330 says: "You can apply for a special repayment deduction rate to reduce your student loan repayment deductions on your secondary earnings, if you earn less than the repayment threshold from your main job." It is for borrowers who:

• have more than one "job", where a student allowance, benefit or NZ Super counts as a job;
• use SB SL or S SL on the secondary job; and
• earn less than the threshold from the main one.

The rate can be anywhere from 0% to 11%, in place of 12%. It lasts until the end of the current quarter, so you reapply each quarter (Student loan special deduction rate).

Repayment deduction exemption (RDE). If you are a New Zealand-based borrower studying full time, or about to start, and you reasonably expect to earn less than $24,128 in the tax year, you can ask IRD to stop student loan deductions altogether. It runs from the day you apply until 31 March, and you need a new one each tax year (Repayment deduction exemption).

How earnings affect your student allowance

StudyLink: "Your income can be up to $284.70 a week (before tax), before it affects your Student Allowance" (How income affects Student Allowance). The limit was $276.11 before the Student Allowances Amendment Regulations 2026 raised it from 1 April 2026.

• Above $284.70 the allowance reduces cent for cent. It does not stop outright. In the 15-hour example, $359.25 gross is $74.55 over the limit, so that week's allowance drops by $74.55.
• Income counts in the week you earn it (Monday to Sunday), not the week you are paid. "You need to let us know by the Sunday of the week you earn the money, not the week you've been paid."
• Holiday pay counts as income in the week you receive it. A final pay with holiday pay can reduce that week's allowance.

The limit is measured before tax, so use your gross pay, not your take-home.

Summer jobs

Over the summer break many students work full time on code M SL. A 40-hour week at $23.95 is $958 gross. In 2026/27:

Twelve weeks like this is $11,496 of earnings and $711.36 of loan deductions. If your income for the whole tax year will stay under $24,128, this is the holiday-job case IRD gives for the repayment deduction exemption: weekly pay over $464, annual income under the threshold. Apply before the job starts.

If you are 18 or over and the job lasts more than 28 days, expect to be automatically enrolled in KiwiSaver at 3.5%: see your first job and first payslip for the opt-out window.

Your allowance and loan payments may continue during a study break of 3 weeks or less. Longer breaks stop them (StudyLink, When payments start). Summer school can qualify for the allowance or loan. Jobseeker Support Student Hardship may be available over a long break; its eligibility rules were under review in 2026, so check StudyLink's current criteria.

A checklist for each semester

1. Estimate your year. Add your expected student allowance and all job earnings for 1 April 2026 to 31 March 2027. That total picks your secondary code.
2. Give each employer an IR330. Main code (M SL) only if the job is your only or main income; otherwise the secondary code for your total. Add SL if you have a loan.
3. Look at the loan line on your first payslip. On a secondary code you should see 12% of your gross. If your main income is under $24,128, apply in myIR for a special deduction rate, and remember to reapply each quarter.
4. Report your income to StudyLink by the Sunday of the week you earn it, using your gross pay.
5. Before a summer job, decide whether you need a repayment deduction exemption. It only runs to 31 March.
6. Recheck when hours change. A new job, more shifts or the end of your allowance can move you into a different code.

Our KiwiSaver and student loan guide covers how each deduction is calculated.

Keeping your loan interest-free

"If you're a New Zealand-based customer, you're entitled to an interest-free student loan" (Student loan interest and fees). If you move overseas you can become overseas-based, and interest then starts to apply. IRD sets out exactly when that happens on its student loan pages, so check them before you leave. If you become overseas-based, interest starts the day after you leave.

Late payment interest applies whether you are here or overseas, so make sure deductions are right and any end-of-year amount is paid on time.

Questions people ask

I get a student allowance. Why is my job on a secondary code?

For PAYE, Inland Revenue treats the student allowance as your main income. Any job you also have must take a secondary code, chosen from your total expected income for the year.

Why is 12% taken for my student loan when I earn under $464 a week?

Because your job is on a secondary code. The $464 weekly threshold applies only to main codes. On a secondary code 12% comes off every dollar unless IRD gives you a special deduction rate.

Does earning over $284.70 a week stop my student allowance?

No. Your allowance reduces cent for cent for every dollar of gross income over $284.70 in a week. It is measured in the week you earn the money.

How long does a repayment deduction exemption last?

From the day you apply until 31 March. You need a new one each tax year.