Secondary tax in NZ

Secondary tax isn't an extra tax. It's the way PAYE works when you have more than one source of income at the same time, like two jobs, or a job and a benefit. Your main income uses the M code. Every other source uses a secondary code, and that code takes tax at one flat rate.

Secondary tax codes for 2026–27

You pick the code based on your estimated total annual income from all sources, not just the second job.

Add SL if you have a student loan, for example S SL. On secondary income the student loan deduction is 12% of every dollar. The repayment threshold doesn't apply to secondary income.

Why secondary codes exist

New Zealand taxes income in layers. The first $15,600 is taxed at 10.5%, the next slice at 17.5%, and so on up. The tax brackets post sets out every layer.

Each employer only sees its own payroll. It has no way of knowing what you earn elsewhere. Your main job uses the M code and works through the layers from the bottom. Your second job's income sits on top of that, in a higher layer. The secondary code tells the second employer which layer, so it can take tax at the right rate.

Worked example: two jobs, $40,000 total

Say you earn $20,000 from your main job and $20,000 from a second job. Your total is $40,000, so the second job uses the S code.

With the right codes, the two employers together take the right amount. This example leaves out the ACC earners' levy and tax credits.

Why people get overtaxed

Secondary tax feels high because the second job never gets the low 10.5% layer. That's correct when your main job has already used it. It goes wrong in a few common ways:

• Your code is too high for your total income. If you pick SH (30%) but your total income ends up under $53,500, the second job takes too much. On a $10,000 second job, that's $3,000 deducted instead of $1,750 at the S rate.
• Your income drops. You picked a code based on a full year, then cut hours or left a job partway through.
• Your "second" job is now your biggest. If the job on the secondary code pays more than the M job, swap them. Use M for your main or highest source.

It can go the other way too. If you use S but your total income goes over $53,500, too little tax comes out and you may get a bill. Using M on two jobs at once is the classic mistake. Inland Revenue says it will ask your employer to change your code if it sees that.

How it gets squared up

The tax year ends on 31 March. Inland Revenue then works out whether you paid the right amount of tax across all your income. For people whose income is all salary, wages and other taxed income, this happens automatically.

• If too much was deducted, you get a refund.
• If too little was deducted, you get a bill.

Assessments go out from late May. The tax refund post explains the timing and what to check.

Tailored tax codes

If your codes keep leaving you with a large refund or a large bill, you can ask Inland Revenue for a tailored tax code. It sets a rate that fits your actual income mix.

• Apply in myIR (Income tax account, then More, then Tailored tax code application), or post the IR23BS form.
• Inland Revenue says it sends a letter and certificate within 10 working days. Applications in February and March can take longer.
• Show the certificate to your employer or payer. Your tax code becomes STC.
• It lasts one tax year. You have to apply again each year you want one.

Businesses and organisations can't use this kind of tailored tax code.

Changing your code

Give your employer a new IR330 tax code declaration. You don't need Inland Revenue to approve it first. If you give an employer no IR330 at all, it has to deduct tax at the no-declaration rate of 45%.

Common questions

Sources: Inland Revenue, Secondary tax codes, Tax codes for individuals, Apply for a tailored tax code, Tax code declaration IR330, Repaying my student loan and Income tax assessments. Checked October 2026. General information, not tax advice.