The independent earner tax credit (IETC): up to $520 a year
A tax credit for workers on low and middle incomes who do not receive family or benefit support. It is worth $10 a week, and many people who qualify never claim it.
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The independent earner tax credit, IETC, reduces the income tax of New Zealand residents who earn between $24,000 and $70,000 a year and do not receive Working for Families, NZ Super, a veteran’s pension, a main benefit or a student allowance. The full credit is $520 a year for income from $24,000 to $66,000. Above $66,000, it is reduced by 13 cents for each dollar of income, so it is worth $260 at $68,000 and disappears at $70,000. The credit can be paid with each pay, at $10 a week, if you use the ME tax code on your main job, or in your end-of-year assessment otherwise. The income range was widened on 31 July 2024, when the upper limits moved from $44,000 and $48,000 to $66,000 and $70,000. Income here means net income for the year, from all sources.
Do you qualify for the IETC?
Independent earner tax credit
$520
| Full credit between | $24,000 and $66,000 |
| Reduced by 13 c per $1 above | $66,000 |
| Per week with the ME code | $10.00 |
The credit by income
| Annual income | IETC per year | Per week | Extra take-home with ME |
|---|---|---|---|
| $23,000 | $0 | $0.00 | $0 |
| $24,000 | $520 | $10.00 | $520 |
| $40,000 | $520 | $10.00 | $520 |
| $66,000 | $520 | $10.00 | $520 |
| $67,000 | $390 | $7.50 | $390 |
| $68,000 | $260 | $5.00 | $260 |
| $69,000 | $130 | $2.50 | $130 |
| $70,000 | $0 | $0.00 | $0 |
| $71,000 | $0 | $0.00 | $0 |
Below $24,000 there is no credit; a full-time job at the minimum wage, about $49,816 a year, qualifies for the full $520. In the abatement zone the credit falls quickly, which means the effective marginal rate on income between $66,000 and $70,000 is 30 % of tax plus 13 % of lost credit.
Who is excluded, and why
The IETC was designed for people who work and do not receive other targeted support. Recipients of Working for Families tax credits, which are larger and income-tested, are excluded, as are people on NZ Super, a veteran’s pension, a main benefit or a student allowance, and anyone who received an overseas equivalent. The exclusion applies if you received one of these payments at any time in the tax year; in that case the credit is prorated or lost, depending on the payment. Income from all sources counts towards the limits: salary, self-employed profit, interest, rental profit.
ME or end of year?
Taking the credit through ME puts $10 in each weekly pay, or $20 in each fortnightly pay, instead of waiting until after 31 March. The trade-off is that you must be sure of your eligibility: if your income for the year ends up above $70,000, or you start receiving Working for Families, the credit paid through ME is clawed back in your assessment. If your income is uncertain, the M code and an end-of-year credit are safer. Only one job can use ME; a second job uses a secondary code.
The credit and the minimum wage
At the adult minimum wage of $23.95 an hour from 1 April 2026, a full-time worker earns about $49,816 a year. With the IETC through ME, their take-home pay after tax and ACC rises by $10 a week. A part-time worker on 20 hours a week earns less than $24,000 and does not qualify. The minimum wage guide sets out the take-home pay at each minimum rate.
Checking you received it
Your end-of-year income tax assessment shows the IETC if it was applied. If you qualified but used M and no credit appears, check that Inland Revenue has your full income and your eligibility details in myIR; the credit can be claimed for up to four previous years. If you used ME and a debt appears, it is usually because your income or circumstances changed during the year.
Other tax credits
The IETC is one of several individual tax credits. Donations tax credits give back a third of donations to approved organisations. Working for Families tax credits, paid by Inland Revenue to families with children, include the family tax credit, the in-work tax credit, the minimum family tax credit and Best Start. These family credits are paid separately and do not appear in the PAYE calculation on this site.
Three examples
A retail worker earning $45,000 with no family support qualifies for the full credit: with ME, their take-home pay after PAYE and ACC is $37,950 a year instead of $37,430 with M. An office worker on $68,000 is in the abatement zone and receives $260, half the credit. A parent on $45,000 who receives Working for Families tax credits is excluded, whatever their income, because the family credits already target that household. Someone who starts a job in October after months on a benefit is also excluded for that tax year, since the exclusion looks at the whole year, and becomes eligible from the next 1 April if their situation continues.
Part-year workers and self-employed people
The income test looks at the whole tax year. A student who works full time from December to March on $8,000 of pay earns less than $24,000 and gets no credit, even with a weekly wage that would qualify on an annual basis. A self-employed person with a profit of $40,000 and no family support can claim the full credit in their individual tax return, since there is no employer to pay it through ME. If you have both a salary and business income, the total counts: a salary of $60,000 plus $8,000 of profit puts you at $68,000, where the credit is only $260.