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.
The walk from gross to 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%.
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.
The vocabulary, defined
| 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 |
Which figure is being asked for
- 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.
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.
Why the gap widens as gross rises
The share you keep falls as your salary climbs, because each additional slice of income is taxed in a higher band while the lower bands stay where they are. 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% |
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.
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.
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 30 July 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