How much of a pay rise do I keep? NZ pay rise tax explained
Why a $10,000 pay rise is closer to $6,000 in your pocket, how much of each extra dollar you keep in every NZ tax bracket, and the myth that a raise can leave you worse off.
By KeaBudget · general information, not financial advice
You've been offered a $10,000 pay rise, or a new job paying $10,000 more. The obvious question is how much of that actually reaches your bank account. The short answer: usually between 57 and 77 cents of every extra dollar, depending on where your salary sits and what else comes off.
Here's how to work out your own number.
Your extra pay is taxed at your top rate
New Zealand taxes income in brackets:
| Income | Rate |
|---|---|
| up to $15,600 | 10.5% |
| $15,601 to $53,500 | 17.5% |
| $53,501 to $78,100 | 30% |
| $78,101 to $180,000 | 33% |
| over $180,000 | 39% |
A pay rise is added on top of what you already earn, so it's taxed at the rate of the bracket it lands in, not your average rate. If you're on $70,000, your average tax rate is under 20%, but every extra dollar is taxed at 30% (and 33% once you pass $78,100).
Then come the other deductions that rise with your pay:
- ACC earners' levy: 1.75%, up to $156,641 a year
- KiwiSaver: your rate, often 3.5%
- Student loan: 12%, if you have one
How much of each extra dollar you keep
With KiwiSaver at 3.5% and 2026/27 rates:
| Your pay | Kept of each extra $1 | With a student loan |
|---|---|---|
| $15,601 to $53,500 | 77c | 65c |
| $53,501 to $78,100 | 65c | 53c |
| $78,101 to $156,641 | 62c | 50c |
| $156,642 to $180,000 | 63.5c | 51.5c |
| over $180,000 | 57.5c | 45.5c |
Above $156,641 the ACC levy stops, which is why you keep a little more in the next band. The KiwiSaver part isn't really lost: it goes into your fund, and your employer adds at least 3.5% of the rise on top. But it doesn't reach your bank account, which is what matters for your budget.
Real examples
All with KiwiSaver at 3.5% and no student loan:
| Pay rise | Extra gross | Extra take-home | A week |
|---|---|---|---|
| $45k → $50k | $5,000 | $3,863 | $74 |
| $70k → $80k | $10,000 | $6,418 | $123 |
| $100k → $110k | $10,000 | $6,175 | $119 |
| $180k → $190k | $10,000 | $5,750 | $111 |
With a student loan, the $70,000 → $80,000 rise is $5,218 a year, or about $100 a week.
The compare two salaries calculator works this out for any two salaries (or an hourly job against a salary), with weekly, fortnightly and monthly figures side by side.
One trap: losing the independent earner tax credit
If you're on tax code ME, you get the independent earner tax credit, worth up to $520 a year. It starts shrinking at $66,000 and is gone at $70,000. In that band, every extra dollar also costs 13 cents of credit.
So a rise from $66,000 to $70,000 keeps only $2,070 of the $4,000 (about 52c in the dollar) if you were getting the credit, compared with $2,590 for someone on code M. Once you're past $70,000 the effect stops. It's still more money, just less than you might expect.
The myth: "a pay rise could put me in a higher bracket and leave me worse off"
On income tax alone, this can't happen in New Zealand. Only the dollars above each threshold are taxed at the higher rate. Crossing from $78,000 to $79,000 means $900 of that rise is taxed at 33% instead of 30%, not your whole salary. More pay always means more take-home.
What can happen is that income-tested support shrinks as you earn more: Working for Families, the Accommodation Supplement, community services cards and student allowances all reduce as income rises. If you get any of these, check how the rise affects them as well as your tax.
Bonuses and back pay
A one-off bonus or lump sum of back pay is taxed differently on the day: your employer uses the "extra pay" rules, which set a flat rate from your income over the last four weeks plus the bonus. It can look like a lot of tax on the payslip, but it all washes out at the end of the year. The bonus tax calculator shows what a bonus will look like in your pay.
Make the rise count
The easiest way to lose a pay rise is to let it disappear into everyday spending without noticing. Before the first bigger pay arrives, give the extra a job:
- a savings goal or emergency fund
- paying down a credit card or loan faster
- a higher KiwiSaver rate, if you want your employer and the government to help more over time
KeaBudget makes this easier: update your pay, and safe-to-spend, your budgets and your goals all follow the new number.
Figures are for the 2026/27 tax year (1 April 2026 to 31 March 2027), from IRD's published rates, assuming one main job. "Cents you keep" ignores tax credits and income-tested support. This is general information, not tax or financial advice.