What the ACC levy does to your take-home pay
Most New Zealand tax calculators return income tax and stop. What actually leaves your pay is that plus the ACC earners' levy, which is why the figures never quite match your payslip.
The short answer
PAYE is income tax plus the ACC earners' levy. The levy is charged on your earnings up to an annual cap and funds New Zealand's accident compensation scheme. It sits outside the income tax brackets entirely, which is why a calculator that shows only tax overstates your take-home pay.
Why it is not part of the tax brackets
Income tax in New Zealand runs through progressive bands — each slice of income taxed at its own rate. The ACC earners' levy does not work that way at all.
It is a flat rate on earnings up to an annual maximum, and above that maximum it stops. It is not progressive, it does not interact with the tax bands, and it is not set by the same process. Inland Revenue collects it, but ACC sets it.
That is why it appears on a payslip inside the PAYE deduction while being conceptually separate from the tax. Two different charges, one line.
What it actually buys
The levy funds cover for injuries that happen outside work — at home, playing sport, in the car. Work injuries are funded separately through levies paid by employers and the self-employed.
The scheme is no-fault, which is the part that matters and the part most easily overlooked. In exchange for it, New Zealanders generally cannot sue for personal injury. The levy is the price of a system that pays regardless of who was at fault, and removes the litigation that dominates injury compensation elsewhere.
Whether that is good value is a question people answer differently. It is not optional either way.
Why leaving it out matters
On a typical salary the levy runs to several hundred dollars a year. A calculator that reports income tax alone therefore overstates take-home pay by roughly that amount.
That sounds small until you consider what people use these tools for: checking a payslip, comparing a job offer, or working out whether a pay rise covers a mortgage increase. In every one of those cases a few hundred dollars of phantom income is enough to make the answer wrong in the direction that matters.
KiwiSaver and student loan repayments then come out on top of PAYE, not inside it — which widens the gap between a tax-only figure and what actually lands in the account.
The levy rate and the income cap it applies up to are both reviewed periodically, so any figure quoted for them carries a date.
Marginal against effective
Two rates get confused constantly, and the levy sits awkwardly between them.
Your marginal rate is what the next dollar is taxed at — the figure that matters for overtime or a second job. Your effective rate is total tax divided by total income, always lower, because the earlier bands were taxed at lower rates.
Neither figure includes the levy unless the calculation says so explicitly. When comparing two jobs or two countries, make sure the numbers being compared include the same things — a headline tax rate that excludes a compulsory levy is not comparable to one that does not have a levy at all.
Where these numbers come from
- Inland Revenue — income tax rates for individuals Five brackets verified: 10.5% to $15,600, 17.5% to $53,500, 30% to $78,100, 33% to $180,000, 39% above
- Inland Revenue — KiwiSaver contribution rates Employee contribution rate options
- Inland Revenue — ACC earners' levy rates The 1.75% rate and the $156,641 maximum earnings for 2026/27
Method last reviewed 2026-10-28 This guide is re-checked against the sources above at least once a year, and again whenever a rule it explains changes. Out of date? Tell us and we will fix it.