Holiday Pay Calculator
Holiday pay paid out is 8% of your gross earnings. Holiday pay for annual holidays you take is the greater of your ordinary weekly pay and your average weekly earnings. You get 4 weeks of paid annual holidays after 12 months of continuous employment.
Work out your holiday pay
Everything earned since you started, or since your last anniversary date
Leave taken in advance, or paid as you go
Before tax. This sets the rate the lump sum is taxed at
- Holiday pay
- $3,840.00
- PAYE tax
- − $672.00
- ACC levy
- − $67.20
- KiwiSaver
- − $134.40
- In your bank account
- $2,966.40
Holiday pay paid as a lump sum is an extra pay, so the rate comes from your regular pay annualised plus the lump sum. Unlike a redundancy payment it carries the ACC earners' levy and a KiwiSaver deduction.
Which rule applies to you
Almost every dispute about holiday pay comes from applying one of these rules to the other situation. They produce different amounts on the same salary, and both are correct in their own column.
| What is happening | How it is calculated | How it is taxed |
|---|---|---|
| You take annual holidays | The greater of ordinary weekly pay and average weekly earnings | Ordinary salary, through PAYE |
| You leave the job | 8% of gross earnings, plus any untaken entitlement | Extra pay, as a lump sum |
| You cash up leave | The greater of ordinary weekly pay and average weekly earnings | Extra pay, as a lump sum |
| Pay-as-you-go holiday pay | 8% of gross earnings, each payday | Ordinary salary, through PAYE |
Pay-as-you-go is only lawful in narrow cases, mainly genuinely casual work and fixed-term agreements shorter than 12 months. It cannot be applied to a permanent employee just because both sides prefer it.
A week of annual holidays where average weekly earnings win
- 1.Gross earnings for the last 4 weeksExcluding one-off and irregular payments$3,687.50
- 2.Ordinary weekly pay, that figure divided by 4$921.88
- 3.Gross earnings for the last 12 months$48,750
- 4.Average weekly earnings, that figure divided by 52$937.50
- Paid at the greater of the two, which is AWE$937.50
What a final pay actually leaves you
The 8% is a gross figure, and four deductions sit between it and your bank account. On $48,000 of gross earnings, with the default KiwiSaver rate and no student loan:
| Line | Amount |
|---|---|
| Holiday pay at 8% | $3,840.00 |
| PAYE tax at 17.5% | − $672.00 |
| ACC earners' levy | − $67.20 |
| KiwiSaver | − $134.40 |
| Reaches your account | $2,966.40 |
The tax rate on a lump sum is not your salary's rate. It is set by your recent pay annualised plus the lump sum, so a payout can cross into a higher band that your regular pay never reaches.
Holiday pay and redundancy are taxed differently
Both can appear as lump sums in the same final pay, and they are not treated alike. A redundancy payment carries no ACC earners' levy and no KiwiSaver deduction. Holiday pay carries both, because it sits inside gross earnings for KiwiSaver.
On $3,840.00 of holiday pay that difference is $201.60. If your final payslip shows two lump sums with different effective rates, this is usually why.
Public holidays are a separate calculation
Annual holidays use weekly figures. Public holidays use daily ones, and the rules do not carry across:
- A public holiday you do not work is a paid day off if it falls on a day you would otherwise have worked, paid at relevant daily pay or average daily pay.
- A public holiday you do work pays at least time and a half for the hours actually worked.
- An alternative holiday is also owed if that public holiday was an otherwise working day for you. It is a whole paid day off regardless of how many hours you worked.
Unused alternative holidays are paid out in your final pay at relevant daily pay, and their value is then included in the gross earnings that the 8% is calculated on.
Next
- how a bonus and redundancy pay are taxedThe extra pay rate, and why it looks so high
- how to read your payslipFinding the holiday pay lines
- why your take-home pay changedWhen a payout moves your usual figure
- gross versus net payEverything sitting between the two
Common questions
How is holiday pay calculated in New Zealand?
Two different rules, and which applies depends on what is happening. Taking annual holidays pays the greater of your ordinary weekly pay and your average weekly earnings. Holiday pay paid out, in a final pay or pay-as-you-go, is 8% of your gross earnings.
How much is 8% holiday pay?
8% of gross earnings for the period. On $48,000 that is $3,840.00 before tax. Gross earnings include the annual leave and alternative holidays being paid out in the same final pay, so the 8% is calculated on a figure that already contains them.
Is holiday pay taxed differently?
Holiday pay inside your regular pay is taxed as ordinary salary and nothing changes. A lump sum is taxed as an extra pay, at a rate set by your recent income annualised plus the lump sum itself. That is why a payout can be taxed at a higher rate than your salary.
Does KiwiSaver come out of holiday pay?
Yes. Holiday pay sits inside gross earnings for KiwiSaver, so your deduction and your employer's contribution both apply. A redundancy payment carries neither KiwiSaver nor the ACC earners' levy, which is why two lines in the same final pay are taxed differently. See how extra pay is taxed.
How much annual leave am I entitled to in New Zealand?
At least 4 weeks of paid annual holidays after 12 months of continuous employment. Before that you have no entitlement: leave is either taken in advance by agreement, or it accrues at 8% and is paid out when you leave.
What is the difference between ordinary weekly pay and average weekly earnings?
Ordinary weekly pay is what you normally earn in a week, taken from your employment agreement or from a 4-week formula. Average weekly earnings is your gross earnings for the last 12 months divided by 52. You are paid whichever is greater, which protects anyone whose recent weeks were unusually quiet and anyone whose year included a lot of overtime.
Where these figures come from
2026–27 tax year (1 April 2026 – 31 March 2027). Last verified 30 July 2026.
Related
- how a bonus and redundancy pay are taxedThe extra pay rules a payout runs through
- how to read your payslipWhere holiday pay appears
- gross versus net payThe gap this page is measuring
- KiwiSaver contribution ratesDeducted from holiday pay too
- what is PAYEWhat comes off the top of all of it