Which NZ tax code should I be on?
Your tax code is a short label that tells your employer how much PAYE to take out of each pay. Get it right and your tax is close to correct by 31 March. Get it wrong and you either lend Inland Revenue money all year, or get a bill you did not see coming.
The core rule is simple. Your main or highest-paying job gets a main code (M, ME, or one of those with SL). Every other job, pension or benefit you are paid at the same time gets a secondary code (SB, S, SH, ST or SA) chosen from your total yearly income across everything.
The basics
- M is the standard main-income code. Use it for your biggest income source if nothing else below fits.
- ME is M plus the independent earner tax credit (IETC). Use it if your total income for the year will be $24,000 to $70,000, and neither you nor your partner get Working for Families, and you do not get an income-tested benefit, NZ Super or a Veteran's Pension. It pays $10 a week ($520 a year) through your pay, shrinking by 13 cents per dollar between $66,001 and $70,000.
- SL added to any code means you have a student loan. M SL, ME SL, S SL and so on. Your employer deducts 12 cents in every dollar above the repayment threshold on your main job, and 12 cents on every dollar of a secondary job. Check the current threshold at ird.govt.nz before relying on it.
- Secondary codes depend on your estimated total income from all sources: SB up to $15,600, S from $15,601 to $53,500, SH from $53,501 to $78,100, ST from $78,101 to $180,000, SA above $180,000.
- ND is the no-notification rate. If you never hand in an IR330, your employer must deduct 45%.
- Other codes exist for specific situations, such as CAE (casual agricultural), NSW (non-resident seasonal worker) and WT (contractor schedular payments). Most wage and salary earners will never need them.
- Your employer does not choose your code. You declare it on an IR330 and they apply it.
How it is worked out
The income tax brackets for the 2026/27 year (unchanged since 1 April 2025) are:
| Income | Rate |
|---|---|
| $0 to $15,600 | 10.5% |
| $15,601 to $53,500 | 17.5% |
| $53,501 to $78,100 | 30% |
| $78,101 to $180,000 | 33% |
| Over $180,000 | 39% |
A main code walks your pay up through those brackets. A secondary code applies one flat rate to the whole of that second income, because the brackets below it are already "used up" by your main job. On top of PAYE, the ACC earners' levy of $1.75 per $100 is taken from both jobs, up to $156,641 of income.
Example: Tom's second job on the wrong code.
Tom earns $52,000 from his main job (code M) and picks up $12,000 a year of weekend bar work. His total is $64,000, which sits in the $53,501 to $78,100 band, so the bar job should be on SH (30%).
Step 1, the correct tax on the bar income. The first $1,500 of it ($52,001 to $53,500) is taxed at 17.5% = $262.50. The remaining $10,500 is taxed at 30% = $3,150. Correct tax on the bar job: $3,412.50.
Step 2, what SH actually deducts. $12,000 × 30% = $3,600. Slightly over, so Tom gets about $187.50 back at year end. That is how secondary codes are meant to work: close, and a little on the safe side.
Step 3, what happens if Tom puts M on both jobs. The bar employer treats $12,000 as if it were Tom's only income and taxes it at 10.5%: $1,260. Tom is under-taxed by $2,152.50 over the year. Inland Revenue works this out automatically after 31 March and sends him a bill for the difference.
Nothing dishonest happened, but Tom now owes a lump sum he probably spent as it came in.
The catch
- Two M codes is the classic mistake. New employers often hand you an IR330 with M already ticked. Only one job can be M.
- ME when you should not be. If you start getting Working for Families, a benefit or NZ Super part way through the year, or your income climbs past $70,000, switch to M. The IETC is worked out in whole months, so Inland Revenue claws back any months you were not entitled to.
- Secondary codes can over-tax you when your main job sits near the bottom of a bracket. That money comes back at year end, but you go without it until then. A tailored tax code from Inland Revenue can fix this if the gap is large.
- Benefits and NZ Super count as income. If you work while receiving them, the job is usually the secondary income, not the benefit.
- Student loan codes are not optional. Leaving SL off does not pause your loan. The shortfall is assessed at year end, with interest and penalties possible.
- Changing jobs mid-year does not change your code. If the new job is your only job, it is M (or ME), not S.
What to do if it is wrong
- Work out your expected total income for the year to 31 March 2027 from every source: jobs, benefits, NZ Super, ACC.
- Pick the code for each income using the thresholds above. Add SL if you have a student loan.
- Download the IR330 from ird.govt.nz, fill in the new code, sign it and give it to your employer or payer before your next payday. One form per employer.
- Check your next payslip. The code should be printed on it.
- Log in to myIR and check what each employer has filed under "My income". If you were on the wrong code for a while, you can see roughly how much is owed either way.
- If you will owe more than you can pay in one go, set up an instalment arrangement in myIR before the assessment arrives rather than after.
Common questions
Can I just use M on both jobs and sort it out later?
You can, but "later" means a bill after 31 March. Inland Revenue may also change your code for you and notify your employer if it sees the pattern.
Does Inland Revenue refund me automatically if I over-paid?
Yes. Wage and salary earners get an automatic income tax assessment after the tax year. Refunds go to the bank account in myIR, so keep it current.
I earn under $24,000 at my main job. Can I still get the IETC?
Only if your total income from all sources is $24,000 or more. If your main job is under $24,000 you can still claim it at year end instead of through your pay.
My employer says they will "work out" my code for me. Is that right?
No. The declaration is yours. Your employer can help you read the flowchart on the IR330, but they must apply the code you sign for, and must use 45% if you sign nothing.
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Last reviewed 14 October 2026. Written by Streetwise from the official pages listed above. General information only, not legal or financial advice.