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Contractor vs permanent

Thinking of going contracting, or back to a salary? Put both sides in and see the real difference in take-home, the break-even rate to match your pay, and exactly what you gain and give up either way.

$100,000

$40,000$300,000+
Advanced options

Unpaid time off and gaps between contracts. The more you take, the higher the rate you need.

Equivalent contract rate

$60/hr

To break even. With a 15% buffer for risk and admin: $69/hr.

Where your rate goes

  • Your take-home (67%)
  • Your KiwiSaver (4%)
  • Tax & ACC (25%)
  • Overheads (5%)

Assumes 40 hours/week, $5,000 expenses and a $700 ACC work levy. Change any of these in the full comparison below.

Compare a specific offer

Got real numbers? Put both the salary and the contract rate in to see take-home, total value, and the trade-off in full.

Permanent role
$
Contract
$

Contractors aren't paid for time off, so weeks worked is the biggest lever on the rate you need. 46 ≈ 6 weeks off a year.

$
%
$

CoverPlus, on top of the earner levy. Occupation-based: a few hundred for office or IT, several thousand for trades. Check your ACC invoice.

Permanent

$77,718

total value / year

Take-home (cash)
$71,873
+ Your KiwiSaver
$3,500
+ Employer KiwiSaver
$3,500
  after ESCT (33.0%)
$2,345

Employer superannuation contribution tax (ESCT) comes off the employer contribution before it reaches your fund, so total value counts the after-ESCT figure. IRD sets the rate from last year's pay plus employer contributions; we estimate it from this salary.

Contract

$114,283

total value / year

Take-home (cash)
$108,487
+ Your KiwiSaver
$5,796
Gross billings / yr
$165,600

Includes your ACC work-levy estimate ($700/yr). It varies a lot by occupation, so set your actual CoverPlus figure on the left.

Total value, side by side

Permanent$77,718
Contract$114,283

The contract is worth $36,565 more a year in total value (cash plus KiwiSaver).

Total value is cash take-home plus all KiwiSaver. On cash alone, the contract is ahead by $36,614/yr.

Going contracting?

To match the permanent role, you'd need

$60/hrbreak-even

With a % buffer: $69/hr

you entered $90/hr

Going permanent?

Your $90/hr is equivalent to a salary of

$154,095

Break-even holds your expenses and weeks worked constant. The buffer covers risks an employee doesn't carry: gaps between contracts, insurance, accounting and admin.

Going contracting, you gain

  • A higher headline rate for the same work
  • Claiming business expenses against tax
  • Flexibility, variety, and choosing your clients

...but you give up

  • ~6 weeks of paid leave (annual + public holidays)
  • Employer KiwiSaver ($3,500/yr here, $2,345 after ESCT)
  • Paid sick & bereavement leave, and income security
  • You fund your own ACC, tax, admin and insurance

Whichever way you're leaning, budgeting makes the leap safer. Plan it with KeaBudget →

2026/27 rates. Contractor ACC shown is the earner levy plus your work-levy estimate (the Working Safer levy of $0.08 per $100 is not modelled), GST is a pass-through (not income), employer KiwiSaver is counted after ESCT, and the IETC is excluded on both sides. A guide, not tax advice.

Whichever way you land, the income still needs a plan.

Contracting income is lumpy and the tax, ACC and GST set-asides are yours to manage; a salary is steady but every dollar still has a job. KeaBudget is the free budget tracker built for Kiwis, made for both.

Start using KeaBudget →

How this is calculated

Permanent value
Salary through 2026/27 PAYE, ACC, KiwiSaver and student loan for take-home, plus the employer KiwiSaver contribution a contractor would have to fund themselves. That contribution is counted after ESCT (employer superannuation contribution tax), which IRD deducts before it reaches your fund; we estimate the ESCT rate from this year's salary plus the employer contribution.
Contract value
Rate times hours times weeks billed for gross billings, less business expenses, then income tax, the ACC earner levy plus your CoverPlus work-levy estimate (the Working Safer levy of $0.08 per $100 is not modelled), student loan and your own KiwiSaver. GST is excluded (it's a pass-through).
Break-evens
We solve for the contract rate whose total value matches the permanent total value, and the salary whose total value matches the contract total value, so the comparison works both ways. Each break-even holds your expenses and weeks worked constant, and the optional buffer covers risks an employee doesn't carry (bench time, insurance, admin).

Permanent vs contractor, at a glance

PermanentContractor
TaxPAYE handled by your employerProvisional tax, GST and an IR3 to file
Paid time off4 weeks annual + 10 days sick + 12 public holidays$0. If you don't work, you don't earn
KiwiSaverCompulsory 3.5% employer contribution (less ESCT)Voluntary, 100% self-funded
ACCEarner levy onlyEarner levy + CoverPlus work levy
Income stabilityNotice periods, redundancy rightsContracts can end on short notice
Getting a mortgageEasy on a few payslipsUsually needs 1–2 years of accounts
Calculate your exact take-home as an NZ contractor →

Frequently asked questions

What hourly rate do I need to match my salary?
That's the break-even rate this calculator gives you. It's the rate where your contractor total value (cash take-home plus your own KiwiSaver) matches the permanent role's total value (take-home plus your own and employer KiwiSaver), at the number of weeks you'd actually bill. Because contractors aren't paid for leave and get no employer KiwiSaver, the break-even rate is always higher than salary ÷ 2,080 hours. A common rule of thumb is salary ÷ 1,000 (so $100k ≈ $100/hr), then add a buffer; this tool gives you the exact figure instead.
Why do contractors charge so much more per hour?
They're covering things a salary hides. No paid annual leave or public holidays (about 6 weeks a year), no paid sick leave, no employer KiwiSaver, and the risk of downtime between contracts. They also fund their own ACC, accounting, insurance and admin. A higher rate just brings the total value back into line.
So is contracting actually better paid?
On take-home, often yes, if you can keep the work flowing. But the gap is smaller than the headline rate suggests once you put a dollar value on leave, sick days, employer KiwiSaver and security. This tool shows both numbers so you can judge the trade-off, not just the rate.
What about GST?
If you earn over $60,000 you must register for GST, but GST is a pass-through: you add 15% to invoices, collect it, and pay it to IRD. It never counts as your income, so it doesn't change your take-home. The toggle is here for completeness.
What does 'weeks worked' mean?
Contractors only earn when they work, so if you want time off you simply don't bill those weeks. 46 weeks assumes roughly 6 weeks off a year unpaid. Drop it lower if you plan more time off, and watch the break-even rate climb.
What's the ACC bill contractors get blindsided by?
Self-employed people pay the ACC earner levy (1.75% up to $156,641) like everyone, PLUS a CoverPlus work levy set by your occupation's risk, billed annually and easy to forget in year one. It can be a few hundred dollars for office or IT work and several thousand for trades. The calculator has a field for it, and it's worth parking an ACC buffer alongside your provisional tax in KeaBudget so the invoice isn't a shock.
Will going contracting affect getting a mortgage?
Often, yes. A permanent employee can get a home loan approved on a few payslips, while a new contractor usually needs 1 to 2 years of accounts (IR3s), or a long-term contract through an approved agency, before most banks will lend. If buying a first home is on the horizon, it's worth timing the switch around it. Our house-deposit and mortgage calculators can help you plan.
Is this financial advice?
No, it's a planning tool using 2026/27 rates. For your specific situation, talk to an accountant, especially on company structure, expenses and ACC CoverPlus.

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Contractor Take-home Calculator →Take-home Pay Calculator →Savings Goal Planner →