Short version: the independent earner tax credit (IETC) takes up to $10 a week, or $520 a year, off your income tax if you earn between $24,000 and $70,000. You can't get it if you or your partner receive Working for Families, or if you're on a main benefit or NZ Super. Most employees claim it by using the ME tax code.
How much you get
The amount depends on your income before tax for the whole tax year, which runs from 1 April to 31 March. Inland Revenue sets it out on its IETC page.
| Income for the year | IETC |
|---|---|
| Under $24,000 | Nothing |
| $24,000 – $66,000 | $10 a week, $520 a year |
| $66,001 – $70,000 | $520, less 13 cents for every dollar over $66,000 |
| $70,000 and over | Nothing |
These thresholds have applied since 31 July 2024, when the top of the band went up. They're what Inland Revenue lists for the current tax year.
Your income doesn't include losses carried forward from earlier years.
Worked examples
| You earn | Over $66,000 by | Reduction (13c per $1) | IETC for the year |
|---|---|---|---|
| $40,000 | – | – | $520 |
| $66,000 | – | – | $520 |
| $67,000 | $1,000 | $130 | $390 |
| $68,000 | $2,000 | $260 | $260 |
| $69,000 | $3,000 | $390 | $130 |
| $70,000 | $4,000 | $520 | $0 |
It's a full-year figure for someone eligible every month. If you're only eligible for part of the year, you get it for those months.
Who can get it
You need to be a New Zealand tax resident for all or part of the tax year, and earn between $24,000 and $70,000. The income can come from:
- salary or wages
- self-employment, or a business run through a trust
- investments
- paid parental leave
- ACC compensation payments
- Student Allowance
- Veterans' weekly compensation.
Who can't
You can't get the IETC if:
- you or your partner are entitled to and receive Working for Families
- you receive an income-tested benefit
- you receive NZ Super
- you receive a Veteran's Pension
- you receive an overseas version of any of these.
It's worked out on whole months. If you get any of those payments at any point in a month, you lose the IETC for that whole month. Get Working for Families for 3 months and you can only have the IETC for the other 9.
How to claim it
If you're on salary or wages
Tell your employer you want tax code ME, or ME SL if you have a student loan. You do this on a tax code declaration (IR330), handed in before your next payday. Your employer then takes slightly less tax out of each pay, so you get the credit as you go.
That works if you earn more than $24,000 in your main job and your total income is between $24,000 and $70,000. If you earn less than $24,000 in your main job but your total income is in the band, you can either wait for the end of the year or apply for a tailored tax code.
Not sure which code you're on? Check your payslip. The PAYE calculator shows how ME changes your take-home pay compared with M.
If your pay goes over $70,000
Switch back to M or M SL. Staying on ME when you no longer qualify means you'll have tax to pay after 31 March.
If you're self-employed or have other income
- Income not taxed before you get it, like self-employment: claim the IETC in your IR3 return. Say how many months you were eligible.
- Income already taxed, like schedular contract payments or investments: Inland Revenue includes the IETC in your end-of-year income tax assessment if you're entitled.
If you didn't claim during the year
You don't lose it. If you were entitled but didn't use the ME code, the IETC is included when your income tax assessment is processed after the year ends. That can show up as part of a tax refund.
Moving off a benefit into work
The IETC starts the month after your benefit stops. Inland Revenue suggests two IR330 forms. Use M or M SL when you start the job, if it's the same month your benefit stopped. Then switch to ME or ME SL after your last pay that month.
Got a second job? Only your main job uses the ME code. The secondary tax post explains the codes for the others, and the tax brackets post shows the rates the credit comes off.
Common questions
What is the IETC tax code?
ME, or ME SL if you have a student loan. Use it for your main job only, and only if your total income is between $24,000 and $70,000.
Can I get IETC and Working for Families?
No. If you or your partner receive Working for Families in a month, you can't get the IETC for that month.
Can I get IETC on NZ Super?
No. People receiving NZ Super, a Veteran's Pension or an income-tested benefit aren't eligible.
What if I used the ME code but earned over $70,000?
You'll have been paid credit you weren't entitled to. Inland Revenue squares it up in your end-of-year assessment, so you may have tax to pay.
Sources: Inland Revenue, Independent earner tax credit (IETC), Getting the IETC if you earn salary or wages, Getting the IETC from other income sources and Getting the IETC if you move from a benefit to a job. Checked October 2026. General information, not tax advice.
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