What is PAYE?
Last verified · Methodology
What it means
PAYE stands for Pay As You Earn. Every time you are paid salary or wages, your employer works out the tax on that pay using your tax code, adds the ACC earners' levy, and pays the total to Inland Revenue (IRD). Because the tax is taken as you go, most employees with one job and no other income never need to file a tax return. After the tax year ends on 31 March, IRD checks what was deducted and sends an assessment if too much or too little was taken.
The PAYE tables assume your pay for the period carries on for a full year. A monthly pay of $5,000 is treated as $60,000 a year, the tax and levy on $60,000 are worked out, and that figure is divided back down to a single pay. Student loan repayments and KiwiSaver contributions come out of the same pay but are separate deductions, not part of PAYE.
How it is worked out
Example
On tax code M, a monthly pay of $5,000 has $939.20 of PAYE deducted in the 2026/27 tax year. On code ME, which includes the independent earner tax credit, the same pay has $895.87 deducted.
Run the numbers
Open the PAYE calculatorRelated terms
PAYE is the income tax and ACC earners' levy your employer takes out of each pay and sends to Inland Revenue, based on the tax code you give them.
Yes. The PAYE figure on your payslip already includes the ACC earners' levy of 1.75%. Your employer does not deduct it separately.