Gross vs Net Pay
Gross pay is the full amount you earn before anything is taken out. Net pay, also called take-home pay, is what reaches your bank account after PAYE, the ACC earners' levy, KiwiSaver and any student loan repayment. On $85,000 a year the gap is $29,695, leaving $55,305 in hand.
What is the difference between gross pay and net pay?
The difference between gross pay and net pay is the four deductions that sit between them: PAYE, the 1.75% ACC earners' levy, KiwiSaver and any student loan repayment. Gross pay is the figure in the job ad. Net pay is the figure in your bank account.
On $85,000 a year with a student loan and the default 3.5% KiwiSaver rate, that gap is $29,695, which is 34.9% of the salary. The remaining 65.1% is $55,305, or $4,609 a month.
Is gross pay before or after tax?
Gross pay is before tax. It is the figure your employment agreement states, the figure your employer reports to Inland Revenue (IRD), and the figure every deduction is calculated from. Net pay is the after-tax figure. On $85,000 the two are $85,000 and $55,305.
Gross salary, gross income and gross earnings all mean before tax as well. In New Zealand payroll the word gross never means after deductions, in any combination. The one figure that behaves differently is a total remuneration package, and it is a package figure rather than a gross pay figure.
What comes out between gross and net?
Four deductions come out between gross and net. One year on $85,000, tax code M SL, contributing 3.5% to KiwiSaver. The middle column is what comes off, the third is what is left after it.
| Line | Amount | Left | What it is |
|---|---|---|---|
| Gross pay | $85,000.00 | $85,000.00 | What your employment agreement says |
| Income tax | − $17,927.50 | $67,072.50 | Progressive, band by band |
| ACC earners' levy | − $1,487.50 | $65,585.00 | 1.75% of earnings, inside the PAYE line |
| Student loan | − $7,304.64 | $58,280.36 | 12% above $24,128 |
| KiwiSaver | − $2,975.00 | $55,305.36 | 3.5% of gross, still your money |
| Net pay | $55,305.36 | 65.1% of gross, into your account |
Two of those five lines are not tax at all. The 1.75% ACC earners' levy is insurance cover, and your KiwiSaver contribution is still your money, sitting in your own account rather than the government's. Strip them out and the tax on $85,000 is $17,928, an effective rate of 21.1%. That walk assumes a steady salary. A bonus or a redundancy payment is taxed at one rate chosen from your annualised income instead, which tax on bonuses and redundancy pay works through.
Your employer also pays $2,975.00 into your KiwiSaver on top of the $85,000, and $892.50 of ESCT on that contribution. Counting it, the cost of employing you is $87,975.
What does gross income mean in New Zealand?
Gross income is everything you earn before tax, from every source: salary and wages, a second job, self-employed income, interest, dividends and rent. Gross pay is the narrower word. It is the gross from one employer for one pay period, and it is the top line of your payslip. A lender asking for your income wants the first. Your payslip shows the second.
| Term | What it means | Where you see it |
|---|---|---|
| Gross pay | Everything one employer pays you in a period, before deductions | Top line of your payslip |
| Gross income | Everything you earn from every source before tax, including a second job, interest, dividends and rent | Loan applications, IRD income summaries |
| Taxable income | The part of gross income that tax is charged on, after any deductible expenses | Your income tax assessment |
| PAYE | Income tax and the ACC earners' levy withheld as one figure | Your payslip, as a single deduction |
| Net pay | Gross pay less every deduction. The same thing as take-home pay | Bottom line of your payslip |
| Take-home pay | The everyday name for net pay. No technical difference | Everywhere except official forms |
| Total remuneration | A package figure that already contains the employer KiwiSaver contribution rather than adding it on top | Some employment agreements |
| Deduction | Money taken out of your pay, whether required by law or agreed by you | The middle of your payslip |
| Employer contribution | Money your employer adds on top of your gross. Not a deduction, and it does not reduce your net pay | Above the line on your payslip |
Two of those nine terms are the same figure under two names. Net pay and take-home pay mean exactly the same thing, and the second is simply the one people say out loud. The two that get confused for each other are gross income and gross pay, because a loan application asks for one and your payslip shows the other.
What does net pay mean on a payslip?
Net pay on a payslip is the bottom line: gross pay less every deduction listed above it, and it is the exact amount your employer transfers to your bank. Take-home pay is the same figure under an everyday name, with no technical difference between the two words. On $85,000 with an M SL tax code it is $55,305 a year and $2,127 a fortnight.
If your net pay and your bank deposit do not match, a deduction is missing from the list. Union fees, payroll giving, a court-ordered deduction and child support all sit below the tax lines and reduce the same figure. deductions from your pay sets out which ones an employer may take without asking, and how to read a New Zealand payslip names every line in the order it appears.
Is your advertised salary gross or net?
Your advertised salary is gross. New Zealand job ads, offers and employment agreements all quote the figure before tax as a matter of convention, so an ad reading $85,000 means $55,305 in hand on an M SL code. Which figure anyone else wants depends on what they are testing.
- A mortgage or loan application: gross. Lenders start from gross because it is verifiable and stable, then apply their own assumptions about tax and living costs. Giving them net understates your position.
- A rental application: net. Landlords and property managers want the money that will pay the rent, so quote what lands in your account each week or fortnight.
- Anything from Inland Revenue: gross, before tax. Tax codes, Working for Families and student loan thresholds are all set against pre-tax income from every source, not the amount you receive.
- A salary negotiation or a job ad: gross. New Zealand salaries are quoted before tax as a matter of convention. Confirm in writing whether the employer KiwiSaver contribution sits on top or inside the number.
Does a lender look at your gross salary or your net pay?
A lender assesses what lands in your account, not the salary on the job ad. The first column below is the advertised number. The last is what a servicing calculation has to work with. On a student loan the gap widens by 12% of everything above $24,128, which is why two applicants on identical salaries can present very different incomes.
| Gross salary | Take-home a month | With a student loan | The loan costs |
|---|---|---|---|
| $60,000 | $3,886 | $3,527 | $359 |
| $80,000 | $4,960 | $4,401 | $559 |
| $100,000 | $5,989 | $5,231 | $759 |
| $120,000 | $7,019 | $6,060 | $959 |
| $150,000 | $8,562 | $7,304 | $1,259 |
Take-home pay is after PAYE, the ACC earners' levy and a 3.5% KiwiSaver contribution. Divided evenly by twelve; a real month varies with your pay cycle.
Is your employer's KiwiSaver contribution part of your gross pay?
No. Your employer contributes 3.5% on top of your salary, which on $90,000 is $3,150 a year. It is real money and it is yours, but it goes to your KiwiSaver account and never to your bank account, and ESCT is deducted from it first. It is locked in until you turn 65, or until a first home withdrawal if you qualify for one. Counting it as gross pay overstates what you have available every month.
What is total remuneration, and why is it not gross pay?
Total remuneration is a package figure with the employer KiwiSaver contribution already inside it, so it is not gross pay and cannot be compared with a salary like for like. A $90,000 package quoted this way pays gross wages of $86,957, because the 3.5% contribution is carved out of the $90,000 rather than added to it.
| Line | Quoted as salary | Quoted as total remuneration |
|---|---|---|
| Figure in the offer | $90,000 | $90,000 |
| Gross pay | $90,000 | $86,957 |
| Employer KiwiSaver on top | $3,150 | $0 |
| Take-home a year | $65,698 | $63,818 |
The same offer figure is worth $1,879 a year less in hand under the second column. Joining KiwiSaver on a total remuneration agreement reduces your gross pay instead of adding money on top of it, which is the opposite of what happens on an ordinary salary. Tax code M, 3.5% employee contribution, no student loan.
The one case where gross is not what it looks like
Under a total remunerationagreement, the figure you were offered already includes your employer's 3.5% KiwiSaver contribution. Joining KiwiSaver then reduces your gross pay rather than adding money on top of it, and the same package figure produces a materially lower take-home than an identical salary quoted the ordinary way. It is lawful, and it has to be agreed in writing, so the wording of the offer is worth reading closely. Salary sacrifice and total remuneration sets out what the wording has to say.
Why does the gap widen as your salary rises?
The gap widens because each additional slice of income is taxed in a higher band while the lower bands stay where they are. The share you keep falls as your salary climbs. That is progressive taxation working as designed, and it never leaves you worse off for earning more.
| Gross salary | Take-home | You keep |
|---|---|---|
| $45,000 | $35,855 | 79.7% |
| $65,000 | $49,867 | 76.7% |
| $85,000 | $62,610 | 73.7% |
| $120,000 | $84,223 | 70.2% |
| $180,000 | $121,681 | 67.6% |
Both national wage benchmarks sit inside that range. Average and median wage after tax runs the same walk on each of them. Move your own KiwiSaver rate and every row moves with it, which changing your KiwiSaver contribution rate prices.
Tax code M, 3.5% KiwiSaver, no student loan. Add an SL code and every row drops by 12% of the income above $24,128.
What are the common gross versus net mistakes?
Five mistakes account for almost every gross and net mix-up. Each one costs money in a different direction, and four of the five are settled by asking which figure the person in front of you is testing.
- Giving a lender your net income. It understates you by $29,695 on an $85,000 salary, and lenders apply their own deductions to gross anyway, so the deductions get counted twice.
- Reading a total remuneration package as gross pay. The employer contribution is inside the figure, so the same number is worth $1,879 a year less in hand than an ordinary salary quoted at the same level.
- Counting KiwiSaver as tax. Your 3.5% contribution leaves your pay but stays your money. It belongs in a savings line, not in the tax line, when you work out what the government actually takes.
- Comparing a gross salary with a net hourly rate. Contract rates are usually quoted gross per hour and salaries gross per year, so convert both before comparing, which the hourly rate and salary calculator does in one step.
- Assuming the gap is a fixed percentage. It is not. You keep 79.7% of $45,000 and 67.6% of $180,000, so a percentage that worked at one salary is wrong at the next one. why your take-home pay changed covers the same effect inside a single year.
Which related calculators help with gross and net pay?
- take-home pay calculatorEnter a gross salary, read the net figure and every deduction
- hourly rate and salary calculatorThe same gross and net walk, per hour
- New Zealand tax bracketsThe bands that decide how wide the gap gets
- how to read a New Zealand payslipWhere gross, PAYE and net sit on the page
Common questions
What is the difference between gross pay and net pay?
Gross pay is the full amount you earn before anything comes out. Net pay is what reaches your bank account after PAYE, the ACC earners' levy, KiwiSaver and any student loan repayment. On $85,000 with a student loan and the default KiwiSaver rate, the gap is about $29,695 a year.
What does gross income mean in New Zealand?
Gross income is everything you earn before tax, from every source. Salary and wages, a second job, self-employment, interest, dividends, rent. Gross pay is narrower. It is the gross from one employer, and it is what your payslip shows.
Is my salary gross or net in New Zealand?
Gross. A New Zealand employment agreement states the amount before tax, and both your employer and Inland Revenue work from it. The common exception is a total remunerationpackage, where the employer's KiwiSaver contribution comes out of the stated figure rather than sitting on top of it.
Does a bank want my gross or net income?
Lenders ask for gross and apply their own deductions, because gross is verifiable from an employment agreement or an Inland Revenue income summary while net moves with your KiwiSaver rate and student loan. Landlords usually ask for net, since that is the money the rent comes out of.
Is KiwiSaver taken from gross or net pay?
It is calculated on your gross pay, at 3.5% by default. The deduction then comes out of your after-tax pay, so your take-home drops by the full contribution, not by a reduced after-tax version of it. More on KiwiSaver rates.
What is taxable income, and is it the same as gross pay?
Taxable income is the portion of your income that tax is charged on. For a salaried employee with no other income and nothing deductible, it equals gross pay. The two separate once you have deductible expenses, losses carried forward, or exempt income.
Written by Nathan Kerr, payroll writer and editor2026–27 rates. Last reviewed 25 August 2026.
Where these figures come from
- IRD. Tax rates for individuals
- IRD. ACC earners' levy rates
- IRD. Student loan repayments
- IRD. Employer contributions to KiwiSaver
2026–27 tax year (1 April 2026 – 31 March 2027). Last verified 25 August 2026.
Related
- take-home pay calculatorEnter your gross, see your net
- how to read a New Zealand payslipWhere each of these words appears
- what is PAYEThe largest single item in the gap
- hourly rate and salary calculatorGross and net, per hour
- New Zealand tax bracketsWhy the gap widens as gross rises
- KiwiSaver contribution ratesThe one deduction you choose
- student loan repaymentsThe deduction that widens the gap the most