How much of my pay goes to my student loan?

If you live in New Zealand and earn wages or a salary, your student loan repayments are 12 cents in every dollar you earn above $24,128 a year. For the 2026/27 tax year that is $464 a week, $928 a fortnight or $2,010.66 a month. Your employer deducts the repayments automatically through your tax code, in the same way as PAYE, and sends them to Inland Revenue.

The good news is that the loan does not grow while you are here. New Zealand-based borrowers pay no interest. The only ongoing charge is a $40 annual administration fee. That changes the moment you move overseas, which is covered below.

The basics

• Repayment threshold for 2026/27: $24,128 a year. Below that you repay nothing from your main job. The threshold has been held at this figure since 2024 and the government has agreed to stop adjusting it for inflation for the foreseeable future, so expect it to stay put.
• Repayment rate: 12 percent of every dollar above the threshold.
• Pay period thresholds: $464 weekly, $928 fortnightly, $1,856 four-weekly, $2,010.66 monthly.
• Tax codes: add SL to your normal code. M SL for your main job, ME SL if you are eligible for the independent earner tax credit, S SL, SH SL or ST SL for secondary jobs.
• Secondary jobs get no threshold. The threshold is used up by your main job, so 12 percent comes off every dollar of a second job. You can apply to Inland Revenue for a special deduction rate if your main job pays less than the threshold.
• Interest-free in New Zealand. You must normally be in NZ for at least 32 days in any 184-day period to keep this status.
• Annual administration fee: $40, charged if your balance is $20 or more at 31 March.
• Benefits paid by Work and Income do not have loan repayments taken out. Use the M code, not M SL, for benefit income.
• Self-employed or other income (rent, dividends, contracting) is assessed at the end of the year on your income tax return, with the same 12 percent above $24,128. You may have to pay interim repayments on 15 January and end-of-year repayments by 8 February.

How it is worked out

Take a borrower on a $55,000 salary from one employer, paid weekly, on the M SL tax code in 2026/27.

The catch

• Leaving the SL off your tax code does not cancel the loan. Inland Revenue will catch it when it matches your income at year end, and you will owe the shortfall in a lump sum, with late payment interest possible if you do not pay on time.
• Going overseas switches interest on. If you are out of New Zealand for more than 184 days (with fewer than 32 days back here in that window), you become overseas-based from the day after you left. Interest is charged at 5.6 percent for the year from 1 April 2026, backdated to your departure. Instead of 12 percent of income you must make fixed minimum repayments based on your balance: $1,000 a year for a loan between $1,000 and $15,000, $2,000 for $15,000 to $30,000, $3,000 for $30,000 to $45,000, $4,000 for $45,000 to $60,000, and $5,000 for over $60,000. Half is due by 30 September and the rest by 31 March.
• Over about $89,285 the overseas minimum does not even cover the interest. Inland Revenue says so on its own page. Long-term overseas borrowers with big loans can watch the balance climb despite paying.
• You can ask for a temporary repayment suspension of up to 12 months when you first go overseas, but interest still accrues during it.
• Late payment interest is 9.6 percent a year (7.6 percent if you are on an instalment arrangement you stick to), charged on overdue amounts of $334 or more.
• A proposed interest relief discretion for overseas borrowers was being considered by the government in 2026. As at October 2026 it is a proposal, not law. Check Inland Revenue before relying on it.
• Threshold frozen means bracket creep. Each pay rise pushes more of your income over $24,128 while the threshold stays put, so your repayment grows faster than your pay.

Do this next

1. Check your tax code with your employer. It should have SL on the end for every job while you have a loan balance. If it does not, give your employer a new IR330 tax code declaration.
2. Check the student loan line on your payslip. Multiply your gross pay for the period minus the period threshold by 12 percent. For a weekly pay of $1,057.69 that is $71.24.
3. Log in to myIR and check your balance. Confirm the deductions are arriving and the $40 fee is the only thing being added.
4. If you have two jobs and the main one pays under $464 a week, apply in myIR for a special deduction rate so your unused threshold is applied to the second job.
5. Want to pay it off faster? Make voluntary payments any time through myIR or internet banking, or ask your employer to deduct extra. There is no penalty for paying early and no bonus either, so only do it if the money is not better used elsewhere, since the loan is interest-free.
6. Going overseas for more than 6 months? Tell Inland Revenue before you go, update your contact details and set up repayments or a suspension. Missing the 30 September and 31 March deadlines triggers late payment interest.
7. If repayments are wrong, contact Inland Revenue through myIR or by phone (current numbers are on ird.govt.nz). Keep a note of what you were told and when.

Common questions

Should I make extra repayments on an interest-free loan?

Financially there is no cost to leaving it, because the balance does not grow while you are in New Zealand apart from the $40 fee. Many people prefer to clear high-interest debt or build an emergency fund first. The exception is if you are planning to live overseas, where 5.6 percent interest makes paying it down before you leave worth considering.

Does the threshold apply to each job?

No. It applies once, to your main job. Secondary jobs are repaid at 12 percent from the first dollar unless Inland Revenue has given you a special deduction rate.

What happens to my repayments if I go on a benefit?

Benefit income from Work and Income is not subject to repayment deductions, so you use the M code. If you also have part-time work on top, that job uses a secondary SL code.

I have paid off my loan but SL is still coming out. What do I do?

Inland Revenue will tell you when your balance is cleared. Give your employer a new tax code declaration without SL, and any overpayment is refunded by Inland Revenue, usually to your bank account through myIR.

Will the threshold go up next year?

The government agreed in early 2025 to stop inflation-adjusting the threshold and to hold it at $24,128 indefinitely. Check the Inland Revenue page below in April 2027 in case that changes.

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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.