IETC Eligibility And The ME Tax Code
The independent earner tax credit (IETC) is a tax credit for New Zealand tax residents who earn between $24,000 and $70,000 in a tax year and do not get certain other payments. When you qualify, you claim it through the ME tax code on your main job, and the credit lowers the tax taken from each pay.
This is a short answer for the 2026/27 tax year (1 April 2026 to 31 March 2027). It covers who is eligible, how much the IETC is worth, and when to write ME or ME SL instead of M on your Tax code declaration.
Am I eligible for the IETC?
You may be eligible for the IETC if you are a New Zealand tax resident and your income for the tax year is between $24,000 and $70,000. Inland Revenue also sets gates that rule it out. The credit is worked out on whole months, so if you receive one of the payments below at any time in a month, you are not entitled to the IETC for that whole month.
IETC eligibility at a glance
You can get the IETC when you are a New Zealand tax resident, your total income is between $24,000 and $70,000, and none of these apply to you:
You or your partner are entitled to and receive Working for Families, you receive an income tested benefit, you receive New Zealand Superannuation, you receive a Veteran's Pension, or you receive an overseas equivalent of any of those. Income that counts includes salary or wages, Student Allowance, Veterans' weekly compensation, ACC compensation, paid parental leave, investments, self employment, and other business income.
Source: Inland Revenue independent earner tax credit (IETC). Employer wage records and payday filing sit on the PAYE and payslips hub. This page keeps it short: eligibility, the amount, and the ME code.
How much is the IETC?
Inland Revenue says the most you can receive is $520 per year, which is $10 a week. The full amount runs to $66,000, then it reduces above that and stops at $70,000. The thresholds changed on 31 July 2024, which is why many earners between $48,000 and $70,000 became newly eligible and, as the r/newzealand PSA thread flagged, should check they are on the correct tax code.
| Your before tax income for the tax year | IETC you can get |
|---|---|
| $24,000 to $66,000 | $10 a week, up to $520 a year |
| $66,001 to $70,000 | Reduces by 13 cents for every dollar you earn over $66,000 |
| Under $24,000, or over $70,000 | No IETC |
Source: Inland Revenue IETC page and Employer's guide IR335 (June 2026). IR335: PAYE for an employee using an IETC tax code (ME or ME SL) is reduced by up to $10 per week, and for each dollar earned over $66,000 the IETC reduces by $0.13, reaching nil after $70,000.
ME or M: which tax code?
ME and ME SL are the main tax codes that carry the IETC. If your main job pays between $24,000 and $70,000, or you earn more than $24,000 in your main job and your total income is between $24,000 and $70,000, Inland Revenue says to choose ME on the Tax code declaration IR330, or ME SL if you have a student loan, and give it to your employer before your next payday. Which letter to write is set on the IR330.
Pull highlight: IR330 note 5: if you or your partner are entitled to and receive Working for Families, or you receive a main benefit, NZ Superannuation, or a Veteran's Pension, you must use M or M SL. You cannot use ME or ME SL.
If your main job pays less than $24,000 but your total income is between $24,000 and $70,000, Inland Revenue gives two options: receive the IETC at the end of the year, or apply for a tailored tax code during the year. If you are not sure you qualify, IR335 says you can stay on M or M SL and Inland Revenue will work out your entitlement in your income tax assessment at the end of the tax year.
How to get the IETC on your pay
Once ME or ME SL is on your IR330, the credit is built into PAYE. Inland Revenue's IR335 confirms the IETC is included in the PAYE calculator when the ME or ME SL tax code is used, so no extra maths is needed on your side. You can check the weekly effect on the PAYE calculator by selecting ME. Fill out a fresh IR330 every time you start a new job, and if a pay rise pushes you over $70,000, switch to M or M SL. Full detail sits on Inland Revenue's getting the IETC if you earn salary or wages page.
Frequently asked questions
Am I eligible for the IETC?
You may get the IETC if you are a New Zealand tax resident earning between $24,000 and $70,000 in the tax year, and you and your partner are not entitled to and receiving Working for Families, and you do not receive an income tested benefit, New Zealand Superannuation, a Veteran's Pension, or an overseas equivalent. The most you can receive is $520 per year.
When should I use the ME tax code?
Use ME, or ME SL if you have a student loan, on your main job's Tax code declaration IR330 when you qualify for the IETC. IR330 note 5: if you or your partner get Working for Families, or you receive a main benefit, NZ Super or Veteran's Pension, you must use M or M SL and you cannot use ME or ME SL.
How do I get the IETC, through the ME code or at year end?
If you qualify, choose ME or ME SL on the IR330 so you get up to $10 a week during the year. If you are not sure you qualify, stay on M or M SL and Inland Revenue works out your entitlement in your income tax assessment at the end of the tax year.