Pay, PAYE and student loans

What is tax code M?

Last verified · Methodology

What it means

Your tax code tells your employer how much PAYE to take. You give it on the IR330 tax code declaration when you start a job. M is for your main income: the job, benefit or pension that pays you the most. You can only have one main code at a time.

There are four main codes. M is the standard one. ME is for people who qualify for the independent earner tax credit, with annual income between $24,000 and $70,000. Add SL to either (M SL or ME SL) if you have a student loan, so your employer deducts repayments. Using the wrong code does not change the tax you owe for the year, but it changes how much is taken each payday, so you may get a bill or a refund after 31 March.

Example

On a monthly pay of $5,000, code M deducts $939.20 and code ME deducts $895.87. With M SL, a further $358.72 goes to the student loan.

Run the numbers

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Related terms

PAYE (Pay As You Earn)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.Secondary taxSecondary tax is PAYE on a second job, taken at one flat rate from the first dollar. The code (SB, S, SH, ST or SA) depends on your total income.Independent earner tax credit (IETC)The independent earner tax credit is worth up to $520 a year for people earning $24,000 to $70,000 who get no Working for Families or NZ Super.
Tax code M: common questions

Tax code M is the main tax code for your only or highest-paying job. ME adds the independent earner tax credit, and SL adds student loan deductions.

Use ME only if you expect your annual income to be between $24,000 and $70,000 and you meet the other IETC conditions, such as not receiving Working for Families or NZ Super. Otherwise use M.

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