Payroll Giving
Payroll giving is a donation deducted from your pay that carries an immediate tax credit of 33.33%, applied in the same pay run. A $30 donation reduces your take-home pay by $20.01, because $9.99 comes straight off the PAYE your employer would otherwise have sent to Inland Revenue.
Two payslip lines, not one
This is where payroll giving is misread. It is not a deduction from gross pay, and it is not a discount on the donation. It is two separate movements that happen in the same pay run.
- The donation comes off your pay. Your gross pay does not change, so the income tax calculated on it does not change either. Your employer passes the money to the organisation you chose.
- The credit comes off your PAYE. Your employer works out 33.33% of the donation and subtracts it from the PAYE they send to Inland Revenue. That money stays in your pay.
The net effect is that the donation costs you two thirds of its face value, and you never wait for it. There is nothing to claim after 31 March because the credit has already been given.
A $30 donation, one pay run
- 1.Your gross payThe donation is not a salary sacrifice and does not reduce gross payunchanged
- 2.Donation deducted and passed to the organisation− $30.00
- 3.Tax credit at 33.33%Subtracted from the PAYE your employer sends to Inland Revenue+ $9.99
- Actual cost to your take-home pay$20.01
What a donation actually costs you
The organisation receives the full donation in every row. The third column is what leaves your bank account once the credit is applied.
| You donate | Tax credit | Costs you | The charity gets |
|---|---|---|---|
| $5.00 | $1.66 | $3.34 | $5.00 |
| $10.00 | $3.33 | $6.67 | $10.00 |
| $20.00 | $6.66 | $13.34 | $20.00 |
| $30.00 | $9.99 | $20.01 | $30.00 |
| $50.00 | $16.66 | $33.34 | $50.00 |
| $100.00 | $33.33 | $66.67 | $100.00 |
The credit is truncated to cents, which is why it is not always exactly one third. Inland Revenue publishes the rate as 33.33 cents in the dollar rather than a recurring third.
Your PAYE line will not match the tax tables
If you recompute PAYE from Inland Revenue's deduction tables and compare it with your payslip, the payslip will be lower. That is correct. Inland Revenue's payday filing specification defines the reported figure for anyone using payroll giving as PAYE minus the tax credits for payroll donations.
So the gap between the table figure and your payslip should equal your donation credit exactly. If it does not, something else is going on, and why your take-home pay changed covers the other causes.
The credit cannot exceed the tax
The credit is limited to the income tax in that pay run. It reduces the tax element of PAYE, not the ACC earners' levy, which is charged separately and is not a tax the credit can offset. In practice this only bites on a very small pay with a very large donation, but it is the reason the credit is capped rather than simply calculated.
What has to be true before you can use it
- Your employer has to offer it. It is voluntary. They can only offer it if they file employment information electronically with Inland Revenue, and they are not obliged to offer it even then.
- The organisation has to be an approved donee. Inland Revenue maintains the list. Most registered charities, schools and religious organisations are on it.
- You choose the amount and the frequency. You can give to more than one organisation, and you can stop at any time.
- You cannot claim the same donation twice. Donations made this way are settled. Donations made outside your pay are claimed after 31 March at the same rate.
Next
- Deductions From Your PayEvery other line that can come off
- how to read a New Zealand payslipWhere each line belongs
- Tax refundWhat is left to settle at the end of the year
- PAYE tax ratesThe tax the credit comes off
- take-home pay calculatorYour pay, line by line
Common questions
How much do you get back from payroll giving in NZ?
33.33% of whatever you donate, as a tax credit. Inland Revenue puts it as 33.33 cents back for every dollar. The credit lands in the same pay run as the donation, so a $30 donation reduces your take-home pay by $20.01, not $30.
Does payroll giving reduce my gross pay or my PAYE?
Both, in different ways. The donation comes out after your gross pay is set, so gross pay is unchanged and so is the tax calculated on it. The credit is then subtracted from the PAYE your employer sends to Inland Revenue. Two lines, moving in opposite directions.
Why does my PAYE not match the IRD tax tables?
Because payroll giving reduces it. Inland Revenue's payday filing specification says the reported figure is "PAYE minus tax credits for payroll donations". Recompute PAYE from the tables and you will get a higher number than the payslip shows. The gap is your credit.
Can I claim a donation tax credit as well?
Not for the same donation. Payroll giving has already given you the credit, so it cannot be claimed again after 31 March. Donations made outside your pay still can be, at the same rate.
Why does my employer not offer payroll giving?
It is voluntary, and it requires the employer to file employment information electronically. Even then they do not have to offer it. There is no route for an employee to start it alone.
Which organisations can I donate to through payroll giving?
Only organisations on Inland Revenue's approved donee list. That covers most registered charities, schools and religious organisations, but not everyone asking for money. You can pick more than one, and you set the amount and frequency.
Where these figures come from
- IRD. Payroll giving as an employee
- IRD. Payroll giving
- IRD. Payroll calculations and business rules specification
2026–27 tax year (1 April 2026 – 31 March 2027). Last verified 30 July 2026.
Related
- how to read a New Zealand payslipWhere the donation and the credit appear
- Deductions From Your PayWhat an employer can and cannot take
- Tax refundWhy payroll giving leaves nothing to claim
- What Is PAYE?The deduction the credit reduces
- take-home pay calculatorYour pay before any donation