Living Wage vs Minimum Wage
The minimum wage is $23.95 an hour and every employer must pay it. The living wage is $28.95 an hour and no employer has to. The gap is $5.00 an hour, or $200.00 across a 40-hour week. From 1 September 2026 the living wage rises to $29.90, widening the gap to $5.95 an hour.
The living wage changes on 1 September 2026
$28.95 an hour applies until 31 August 2026. $29.90 an hour applies from 1 September 2026, which is when accredited employers must have moved their staff onto the new rate. The minimum wage does not move on that date. It was last set at $23.95 on 1 April 2026 and is reviewed each year for 1 April.
The two rates side by side
| Minimum wage | Living wage | |
|---|---|---|
| Rate now | $23.95 | $28.95 |
| Rate from 1 September 2026 | $23.95, unchanged | $29.90 |
| A 40-hour week | $958.00 | $1,158.00 |
| A year at 40 hours | $49,816 | $60,216 |
| Compulsory | Yes, for every employer | No, entirely voluntary |
| Set by | Government, under the Minimum Wage Act | Living Wage Movement Aotearoa New Zealand |
| Changes on | 1 April 2026 | 1 September each year |
| Calculated from | An annual government review of wages, inflation and employment | What a two-adult, two-child household needs to live and participate |
| If it is not paid | A breach of the law, recoverable as unpaid wages | Nothing. Accreditation can be withdrawn |
What the gap is worth in your bank account
Forty hours a week on tax code M with the 3.5% default KiwiSaver rate and no student loan. The gap between the two rates straddles the $53,500 tax threshold, so part of it is taxed at 17.5% and the rest at 30%.
| Rate | A week, gross | A week, take-home | A year, take-home |
|---|---|---|---|
| Minimum wage, $23.95 | $958.00 | $761.06 | $39,575 |
| Living wage, $28.95 | $1,158.00 | $899.42 | $46,769 |
| Living wage from September, $29.90 | $1,196.00 | $924.02 | $48,049 |
The gross gap of $10,400 a year becomes $7,195 once PAYE, the ACC earners' levy and KiwiSaver have taken their share, so about 69.2% of the difference reaches your account. From 1 September 2026 the gross gap of $12,376 becomes $8,474.
On an SL tax code both rows lose a further 12% of the income above $24,128, which narrows the take-home gap again. The minimum wage after tax page shows that comparison in full.
Why the after-tax gap is smaller than the headline gap
Every extra dollar between the two rates is taxed at your marginal rate rather than your average one, and your KiwiSaver contribution is calculated on the larger gross too. A pay rise of $5.00 an hour therefore lifts your take-home by less than $5.00 an hour.
That is not a reason to discount the difference. The KiwiSaver share is still your money, sitting in your own account, and your employer must add its own 3.5% on top of the higher gross as well. Counting the employer contribution, moving from the minimum wage to the living wage is worth $10,764 a year in total remuneration.
Who sets each rate
- The minimum wage is set by government under the Minimum Wage Act and reviewed every year, with any change taking effect on 1 April. It applies to every employee aged 16 and over, with lower starting-out and training rates for defined groups. Paying below it is unlawful, and the shortfall is recoverable as unpaid wages.
- The living wage is calculated by Living Wage Movement Aotearoa New Zealand from what a household needs rather than from what the market pays. The new rate is announced ahead of time and takes effect on 1 September. Employers who adopt it can be accredited, which commits them to paying it to directly employed staff and to regular contracted staff such as cleaners and security workers.
The practical difference is enforcement. One rate is a floor with legal consequences. The other is a commitment an employer makes and can withdraw from, which is why it is worth confirming in writing if it is part of why you took a job.
Neither rate is what you take home
Both are gross hourly rates, quoted before anything comes out. PAYE, KiwiSaver and any student loan repayment reduce them the same way they reduce any other wage. At $28.95 an hour over a 40-hour week, the amount landing in your account is $899.42 rather than $1,158.00. Use the hourly rate calculator to run either rate at your own hours and tax code.
Common questions
What is the difference between the living wage and the minimum wage in NZ?
The minimum wage of $23.95 an hour is set by government and is compulsory for every employer. The living wage of $28.95 an hour, rising to $29.90 on 1 September 2026, is calculated by Living Wage Movement Aotearoa New Zealand and is voluntary. A gap of $5.00 an hour now, and $5.95 from September.
Is the living wage compulsory in New Zealand?
No. No employer has to pay it. Accredited employers choose to, and commit to paying it to their directly employed staff and their regular contracted staff, and to lifting the rate on 1 September each year when the new figure takes effect.
When does the living wage go up?
On 1 September each year. $28.95 an hour becomes $29.90 from 1 September 2026. The minimum wage moves on a different date, 1 April, after an annual government review, which is why the two rates step apart and then close again through the year.
How much more is the living wage a year than the minimum wage?
At 40 hours a week, $60,216 against $49,816, a gross difference of $10,400 a year. From 1 September 2026 that becomes $12,376.
How is the living wage calculated?
From household need rather than market rates. The movement models the income two adults and two children require to meet necessities and take part in their community, with one adult working full time and the other half time, then converts that figure to an hourly rate. The minimum wage, by contrast, is a policy judgement made by government each year.
Where these figures come from
2026–27 tax year (1 April 2026 – 31 March 2027). Last verified 30 July 2026.
Related
- minimum wage after taxWhat $23.95 an hour leaves you
- average and median wage after taxWhere both benchmarks sit against typical pay
- hourly rate and salary calculatorEither rate, at your own hours
- weekly pay calculatorTake-home for a single week
- gross vs net payWhy the after-tax gap is smaller
- New Zealand tax bracketsThe band both rates fall inside
- take-home pay calculatorEvery deduction, on your own figures