The Independent Earner Tax Credit
The independent earner tax credit is $520 a year, about $10.00 a week, for New Zealand tax residents whose total income is $24,000 to $70,000 and who receive no Working for Families, main benefit, NZ Superannuation or Veteran's Pension. You claim it through tax code ME.
How much independent earner tax credit will I get?
Every job added together, plus any taxable pension, ACC weekly compensation, rental profit or other taxable income. Not one job
Changes the code that delivers the credit, never the amount
- A week
- $10.00
- A fortnight
- $20.00
- For the year
- $520.00
You are in the flat range, $24,000 to $66,000, so the full credit applies. It starts abating $11,000 from here.
The credit abates by 13 cents in the dollar above $66,000. Using code ME delivers it through your payslip during the year. Staying on M does not forfeit it: Inland Revenue applies it in the end-of-year assessment instead, so you receive the same $520 up to a year later.
Total income, not the income from one job
This is the mistake the calculator exists to catch. The credit is tested against every dollar you earn in the tax year, added together. A single job paying $42,000 earns the full $520. Add a second job paying $30,000 and the total is $72,000, which is past the $70,000 cut-off, so the credit is $0.
Neither job looks disqualifying on its own, and payroll cannot see the other one. If you are on code ME across a year like that, the credit you received comes back as tax to pay in the end-of-year assessment.
Who qualifies for the independent earner tax credit?
Four conditions, all of which have to hold. The first is the one people get wrong, because it is about every source of income you have rather than about one job.
- Your total income for the tax year is $24,000 to $70,000. Every job added together, plus any taxable pension, ACC weekly compensation, rental profit or other taxable income. Two jobs paying $30,000 and $18,000 count as $48,000, not as two incomes.
- You are a New Zealand tax resident. Residence is a condition of the credit, not just of the tax code.
- You receive none of the excluded payments. Working for Families or an overseas equivalent, an income-tested main benefit, NZ Superannuation and a Veteran's Pension each rule it out on their own. This applies to your household in the case of Working for Families, so a partner receiving it ends your entitlement too.
- You claim it, through your tax code or your return. Nothing is paid automatically during the year. Tax code ME is the claim.
Nothing about your work matters. Hourly or salaried, one job or three, full-time or eight hours a week, permanent or fixed term. The credit is read off the total and the exclusions, and nothing else.
How much do you get at each income?
The credit is flat across most of its range and then tapers. It does not taper in at the bottom: at $23,999 of total income you receive nothing, and at $24,000 you receive the full $520.
| Total income | Credit for the year | A week |
|---|---|---|
| $23,999 | $0.00 | $0.00 |
| $24,000 | $520.00 | $10.00 |
| $40,000 | $520.00 | $10.00 |
| $60,000 | $520.00 | $10.00 |
| $66,000 | $520.00 | $10.00 |
| $67,000 | $390.00 | $7.50 |
| $68,000 | $260.00 | $5.00 |
| $69,000 | $130.00 | $2.50 |
| $70,000 | $0.00 | $0.00 |
Above $66,000 the credit reduces by 13 cents for every extra dollar of income, so the whole $520 is gone across the $4,000 between $66,000 and $70,000. Inside that band, an extra dollar of income costs 13 cents of credit on top of the income tax and ACC earners' levy it already attracts.
What happens inside the abatement band?
Between $66,000 and $70,000 every extra dollar of income costs 13 cents of credit, on top of the income tax and ACC earners' levy that dollar already attracts. The whole $520 disappears across $4,000 of income.
| Total income | Credit | A week |
|---|---|---|
| $66,000 | $520.00 | $10.00 |
| $67,000 | $390.00 | $7.50 |
| $68,000 | $260.00 | $5.00 |
| $69,000 | $130.00 | $2.50 |
| $70,000 | $0.00 | $0.00 |
A pay rise inside this band is still worth taking. It is worth 13 cents in the dollar less than the same rise below $66,000, which is worth knowing when you are comparing an offer against overtime that pushes you past the threshold.
Is the credit still $24,000 to $48,000?
No. That band was repealed on 31 July 2024, and this is the single most consequential stale figure on the New Zealand tax web. The table below prices the difference at five incomes. Read the $60,000 row first.
| Total income | Repealed band (nil at $48,000) | Current band (nil at $70,000) |
|---|---|---|
| $40,000 | $520.00 | $520.00 |
| $48,000 | $0.00 | $520.00 |
| $60,000 | $0.00 | $520.00 |
| $66,000 | $0.00 | $520.00 |
| $70,000 | $0.00 | $0.00 |
Several widely read New Zealand payroll, accounting and money-transfer sites still publish the repealed band. The practical effect is that someone earning $60,000 is told they earn too much, when they qualify for the full $520 and have been leaving $10.00 a week on the table. The figures here are the ones in force for the 2026–27 tax year (1 April 2026 to 31 March 2027), verified against Inland Revenue's published guidance on 25 August 2026.
How does the credit reach you?
There are two routes and they deliver the same $520. What differs is when.
- Through your payslip, on code ME. Payroll subtracts the credit from your PAYE every pay run, so you receive about $10.00 a week more in your account across the year. Add a student loan and the code is ME SL. This is the only route that pays it during the year.
- In the end-of-year assessment, on code M. Inland Revenue applies the credit when it assesses your year after 31 March, whether or not you used ME. Staying on M does not forfeit it. It defers it, and you have lent Inland Revenue $520 for up to a year without interest.
The assessment is also what corrects an over-claim. Use ME and finish the year above $70,000, or start receiving Working for Families partway through, and the credit you received through your payslip is recalculated and the excess becomes payable. tax codes M and ME, with worked examples on both sides of the abatement threshold.
Which payments rule the credit out?
Any one of these ends the entitlement, whatever your income. They are the reason the credit exists: it is targeted at earners who receive no other income support.
- Working for Families (or an overseas equivalent)
- An income-tested main benefit
- NZ Superannuation
- A Veteran's Pension
- Not a New Zealand tax resident
Where one of them applied for part of the year only, the credit is apportioned to the part of the year in which it did not. An income-tested main benefit means one of the main benefits under the Social Security Act 2018: Jobseeker Support, Sole Parent Support, the Supported Living Payment, Youth Payment, Young Parent Payment and the Emergency Benefit. Supplementary assistance such as the Accommodation Supplement is not a main benefit. The tax code finder asks the exclusion question directly, then names the code you should be on.
What does this calculator not decide?
- Your tax residency. The credit requires you to be a New Zealand tax resident. The calculator assumes you are, because residency is a status test rather than an income one.
- Part-year exclusions. Where an excluded payment applied for part of the year only, the credit is apportioned to the part of the year in which it did not. The calculator treats an exclusion as applying to the whole year, which is the conservative answer.
- Whether your income is taxable. Enter taxable income. A first home withdrawal from KiwiSaver, for instance, is not income and does not count.
What are the common independent earner tax credit mistakes?
- Testing one job instead of the total. $42,000 and $30,000 are $72,000, and the credit at $72,000 is $0. Payroll cannot see your other job, so nothing stops you claiming it.
- Reading a repealed band and giving up. At $60,000 the old figures say nil and the current figures say $520. Check the year on any page telling you that you earn too much.
- Assuming code M forfeits it. It does not. It defers it to the end-of-year assessment, so you receive the same $520 up to a year later.
- Expecting a taper at the bottom. There is none. At $23,999 you get nothing, and one dollar more gets you the whole $520.
Which related calculators help with the IETC?
- tax codes M and MEWhat the credit does to your payslip
- what tax code am IIf the answer here changes your code
- Working for FamiliesThe payment that rules this credit out
- PAYE calculatorYour take-home pay with the credit applied
What else do people ask about the IETC?
What is the independent earner tax credit in New Zealand?
A tax credit of $520 a year, about $10.00 a week, for New Zealand tax residents whose total income is $24,000 to $70,000 and who receive none of the excluded payments. It is claimed through tax code ME or ME SL.
What is the income limit for the independent earner tax credit?
The full $520 runs from $24,000 to $66,000 of total income. Above $66,000 it abates by 13 cents in the dollar and reaches nil at $70,000. Below $24,000 nothing is payable, and that lower limit is a hard cut-off rather than a taper.
Does the credit count income from one job or all of them?
All of them. The test is your total income for the tax year: every job, plus any taxable pension, ACC weekly compensation, rental profit or other taxable income. Jobs paying $42,000 and $30,000 count as $72,000, which is past the cut-off, even though each on its own would qualify for the full credit.
Is the independent earner tax credit still $24,000 to $48,000?
No. That band was repealed on 31 July 2024. The credit now abates from $66,000 to nil at $70,000, rather than from $44,000 to nil at $48,000. Sites still publishing the old band describe a $60,000 income as ineligible when it qualifies for the full $520.
Can I get the independent earner tax credit on Working for Families?
No. Working for Families, or an overseas equivalent, rules it out for the period you receive it. So does an income-tested main benefit, NZ Superannuation or a Veteran's Pension. Your main-income code stays M or M SL.
How do I claim the independent earner tax credit?
What happens if I claim the IETC and then earn too much?
The end-of-year assessment recalculates it, and anything you received but were not entitled to becomes tax to pay. That happens if you finish above $70,000, or start receiving an excluded payment part-way through a year spent on code ME. Where an exclusion applied for part of the year only, the credit is apportioned to the part in which it did not.
Do I get the credit if I only worked part of the year?
It is based on your total income for the tax year, so a part year finishing below $24,000 does not qualify. Where an excluded payment applied for only part of the year, the credit is apportioned to the part of the year in which it did not.
Written by Nathan Kerr, payroll writer and editor2026–27 rates. Last reviewed 25 August 2026.
Where these figures come from
2026–27 tax year (1 April 2026 – 31 March 2027). Last verified 25 August 2026.
Where else is the credit explained?
- tax codes M and MEWhat the credit does to your payslip, week by week
- Working for FamiliesA payment from IRD that rules this credit out
- the student loan suffixThe credit with a student loan attached
- what tax code am IFive questions, including the credit test
- changing your tax codeMoving to ME, and when it takes effect
- New Zealand tax codesEvery code and rate in one table
- tax refundWhere an unclaimed credit turns up
- the New Zealand tax year1 April to 31 March, and when the credit is squared up