Tax Code ME
Tax code ME is for your highest-earning job when your total income from all sources is $24,000 to $70,000 and you claim the independent earner tax credit. PAYE runs through the same progressive bands as M, plus the 1.75% ACC earners' levy, then $520 a year comes off.
What ME actually withholds
ME has no rate of its own. It uses the progressive scale, and every rate quoted for it is two rates added together: the income tax band your next dollar falls into, plus the ACC earners' levy of 1.75% on earnings up to $156,641 a year. The ME income band spans two of those brackets.
The credit does not change either of those. It is a flat $520 subtracted after the bands have been applied, so your marginal rate on ME is identical to M and your effective rate is lower. On $52,000 of income, PAYE on M is $8,918.00 for the year, an effective 17.15%. The same income on ME pays $8,398.00, an effective 16.15%. The gap is exactly 1% of your gross, which is what $520 divided by $52,000 comes to.
The codes either side of this one
| Code | Who it is for | Rate |
|---|---|---|
| M | Main income, no student loan | Progressive |
| MEthis page | Main income, claiming the independent earner tax credit | Progressive − $520 |
| ME SL | Main income, IETC and a student loan | Progressive − $520 + 12% |
Every New Zealand tax code, in one table: all tax codes and rates.
Who ME is for
Two facts decide it, and both are about your whole year rather than about this employer:
- This is your highest-earning source of income. ME is a main-income code. A second job never gets it, no matter what that job pays. Every job after your main one takes a secondary tax.
- Your total income from all sources is $24,000 to $70,000, with none of the excluded payments. Add every job together, plus any taxable pension, ACC weekly compensation or other taxable income. Working for Families, an income-tested main benefit, NZ Superannuation and a Veteran's Pension each rule the credit out on their own, as does being outside New Zealand tax residence. Any one of them and the code stays M.
That is the whole eligibility test as it affects your payslip. The rules behind it, including how the credit abates between $66,000 and $70,000 and what happens in a part-year, are set out on the independent earner tax credit page.
Your pay on tax code ME
- Gross
- $70,000.00
- PAYE tax
- − $13,220.50
- ACC levy
- − $1,225.00
- KiwiSaver
- − $2,450.00
- Take-home
- $53,104.50
You keep 75.9% of your gross pay.
PAYE here is income tax plus the 1.75% ACC earners' levy, with the independent earner tax credit already deducted. Enter an income above $70,000 and the credit disappears, which is exactly what payroll does. KiwiSaver is shown at the 3.5% default.
Example 1. $1,000.00 a week on ME
- 1.Gross pay for the week$52,000 a year$1,000.00
- 2.PAYE: income tax plus the ACC earners' levyThe $520 credit is already inside this figure. It comes off your PAYE, not your gross− $161.50
- 3.KiwiSaver at 3.5%− $35.00
- Into your account$803.50
On $52,000 a year the credit is whole, so PAYE is $161.50 a week against $171.50 on M. That difference of $10.00 a week is the $520 credit spread across 52 paydays.
Example 2. $5,600.00 a month on ME
- 1.Gross pay for the month$67,200 a year$5,600.00
- 2.PAYE: income tax plus the ACC earners' levyThe credit has partly abated at this income, so less than $520 is inside the figure− $1,099.36
- 3.KiwiSaver at 3.5%− $196.00
- Into your account$4,304.64
This one annualises to $67,200, which is above the $66,000 abatement threshold. The credit is worth $364.00 rather than $520, so PAYE of $1,099.36 is only $30.34 a month below the $1,129.70 the same pay would attract on M. Both examples assume the 3.5% KiwiSaver rate and no student loan.
ME is the wrong code for you if…
- You receive Working for Families, an income-tested main benefit, NZ Superannuation or a Veteran's Pension. Any one of them rules out the credit outright, whatever your income. The code is M.
- Your total income is under $24,000 or $70,000 and over. The credit is nil at both ends. A pay rise that lifts you past $70,000 mid-year makes ME wrong from that point on.
- You have a student loan being repaid. The code is ME SL, not ME. Leaving the suffix off does not cancel the debt.
- This is not your highest-earning job. Second jobs use a flat secondary tax chosen on your total income: SB, S, SH, ST or SA.
- You are not a New Zealand tax resident. Residence is one of the conditions for the credit, so the code is M.
What happens at the end-of-year square-up
After 31 March, Inland Revenue works out the credit you were actually entitled to on your real income for the year, and compares it with the credit your payslips already gave you. ME is a forecast, so the two only match when the forecast held.
Three things break it. Your income ends the year above $70,000 and the credit was never due, so the full $520 is asked back. Your income lands between $66,000 and $70,000 and part of it abates, so part is asked back. Or a Working for Families payment starts partway through the year, and the credit stops from that point.
The reverse happens too. Stay on M all year while eligible and you have simply lent Inland Revenue $520 interest-free. It comes back in the assessment after 31 March rather than at $10.00 a week, because the credit itself is not lost by using the wrong code. Only its timing is. That is the one real difference between M and ME for an eligible earner, and it is a cash-flow difference rather than a tax one.
Common questions
What does tax code ME mean in New Zealand?
ME is M with the independent earner tax credit attached. It goes on your highest-earning job when your total income is $24,000 to $70,000 and you receive none of Inland Revenue's excluded payments. Payroll runs the same progressive bands as M, then takes $520 a year off your PAYE.
What is the difference between tax code M and ME?
The PAYE calculation is identical. ME subtracts the $520 credit before your deduction is worked out, which is about $10.00 a week. On M an eligible earner still receives the same $520. Just as a lump sum after 31 March instead of through their payslip.
How much is tax code ME worth?
$520 a year, about $10.00 a week, on total income of $24,000 to $66,000. Above $66,000 it abates at 13 cents in the dollar and reaches nil at $70,000. the independent earner tax credit.
Can I use ME if I get Working for Families?
No. Working for Families rules the credit out, so your code stays M or M SL. The same applies to an income-tested main benefit, NZ Superannuation, a Veteran's Pension, and to anyone who is not a New Zealand tax resident.
What happens if I use ME and I am not eligible?
Payroll withholds $520 a year less than it should, and Inland Revenue asks for the difference after 31 March. Nothing happens in the meantime, and no penalty applies while you are on payroll, but the money is not yours to keep. changing your tax code stops the shortfall growing.
Is there an ME SL tax code?
Yes. ME SL is ME with the student loan suffix. It subtracts the $520 credit and deducts 12% of earnings above $24,128 a year. There is no code written MESL without the space. The SL suffix explained.
Where these figures come from
2026–27 tax year (1 April 2026 – 31 March 2027). Last verified 30 July 2026.
Related
- the independent earner tax creditEligibility rules and the abatement curve in full
- tax code MThe same code without the credit
- the student loan suffixWhat the student loan suffix adds
- changing your tax codeMoving from M to ME, and when it takes effect
- New Zealand tax codesEvery code and rate in one table
- New Zealand tax bracketsThe bands ME runs your income through