NZ tax codes explained

Most people need one of a handful of codes: M for their main job, ME if they qualify for the independent earner tax credit, a secondary code for any other job, and SL added to any of them if they have a student loan.

Main income: M and ME

Inland Revenue's rule is that you have one main income, your highest source, and everything else is secondary. For pay from that main job you use M. Payroll then applies the full set of tax bands to that pay, starting at the lowest rate.

ME is M plus the independent earner tax credit, worth up to $520 a year. Inland Revenue says it's for New Zealand tax residents earning between $24,000 and $70,000 who don't get Working for Families, an income-tested benefit, NZ Super or a Veteran's Pension. Above $66,000 the credit shrinks, reaching nothing at $70,000. If your income ends up outside the range, using ME means too little tax was taken, which is recovered after the year ends.

Second jobs: secondary codes

Your main job already uses up the lower tax bands, so a second job would be under-taxed if it started from the bottom again. Secondary codes fix that by taxing every dollar of the extra job at one flat rate, chosen to match where your total income falls:

The ACC levy is added on top of each rate, as it is for main income.

Worked example: picking the code for a second job

Take an invented worker earning $48,000 a year in their main job and $30,000 in a second job, both paid fortnightly. Their total is $78,000, so the right code for the second job is SH. Over a year that job's PAYE comes to about $9,517.82.

If they wrongly gave the second employer code M, payroll would treat $30,000 as their only income and take about $4,682.60. That's roughly $4,835.22 too little, which Inland Revenue would ask for after 31 March. The take-home pay calculator lets you try each code.

Student loans: adding SL

If you have a student loan and earn salary or wages, add SL to your code (M SL, ME SL, S SL and so on). That tells the employer to take repayments as well as tax. On your main job, repayments are 12% of pay above the repayment threshold; on secondary jobs there's no threshold, so it's 12% of every dollar. Inland Revenue reminds borrowers to change back to a code without SL once the loan is paid off.

Less common codes

• WT for schedular payments, a set of contractor-type payments where tax is taken at a chosen rate.
• CAE for casual agricultural workers, such as shearers and shed-hands working day to day.
• NSW for recognised seasonal workers and some foreign crew of fishing vessels.
• EDW for temporary work during a general election.
• Tailored codes, which Inland Revenue can issue when none of the standard codes fit your situation.

The page What tax code should I use? (Inland Revenue) has a tool and the full list. Interest and dividends don't need a code at all; the payer deducts resident withholding tax instead.

Telling your employer

You choose a code by filling in the tax code declaration (IR330) for each new job or payer. According to Inland Revenue, payers don't need it to confirm your choice, so getting it right is up to you. Review your code when things change: taking out or paying off a student loan, a big change in expected income, starting a second job, or moving between jobs.

Mistakes to avoid

• Using M for two jobs at once. Only one income can be main.
• Choosing the secondary code from the second job's pay alone, rather than total income.
• Forgetting SL, or forgetting to remove it once the loan is repaid.
• Using ME after income rises above the range, or while receiving Working for Families.

For how the deductions themselves are calculated, read how NZ PAYE is worked out.

Last reviewed: 3 October 2026