Withholding Tax Calculator NZ 2026/2027
Work out NZ withholding on contractor invoices, bank interest, dividends, or payments overseas. Switch between schedular payments, RWT, and NRWT using the tabs on the tool.
Withholding is always taken from the GST exclusive amount.
Choose the payment type, then pick the rate that matches your IRD rules.
Use the rate on your IR330C. 33% is the common standard when no other rate is elected. 45% applies if no IR330C is given.
Bank deposit includes any GST on the invoice. Set that GST aside for your return. Results update live when you change the rate.
What are Schedular Payments (Withholding Tax)?
If you are an independent contractor or freelancer in New Zealand, you may be subject to Withholding Tax. Inland Revenue calls this tax on Schedular Payments.
Unlike a standard employee on PAYE, contractors use a flat rate deduction. When you issue an invoice, your client deducts a flat percentage and sends it to IRD. You receive the remaining net amount in your bank account.
Which jobs fall under schedular payment rules
Schedular payment rules apply when your contract work mainly consists of labour rather than the supply of goods. Inland Revenue lists the qualifying activities in Schedule 4 of the Income Tax Act 2007, and the IR330C form carries the practical version of that list for the 2026/27 tax year.
Work that commonly falls under the rules includes an IT project manager placed through a recruitment agency, a builder working through a labour hire business, a freelance journalist paid for a magazine article, an insurance agent or salesperson paid commission, a company director paid directors fees, a commercial cleaning partnership paid by a local business, companies contracted to supply labour to farms, orchards and vineyards, non resident contractors, entertainers and sportspeople, and some competition prize money. A contractor can be an individual, a partnership, a trust or a company.
The rules generally do not apply when your main business is supplying goods rather than labour. If your work is not on the schedular list, you and your payer can still agree in writing to treat the payments as schedular payments, which gives both sides certainty about the tax. You must also register for GST once your schedular payments reach $60,000 a year before expenses, or if you add GST to your prices. See the IRD guidance on who gets schedular payments.
Beware the "GST Trap"
One of the most common and costly mistakes new contractors make is calculating their withholding tax on the total invoice amount, including the GST. That is one of the traps we unpack in contractors vs employees: the GST trap.
Legally, withholding tax is only calculated on your Gross Income (the GST exclusive amount). Our calculator automatically handles this, and the GST calculator can split 15% GST the same way. Create the tax invoice with the GST invoice generator. Here is exactly how it works if you invoice $1,000 + GST with a 20% tax rate:
- Base Rate: $1,000
- Add GST (15%): $150
- Total Invoice to Client: $1,150
- Withholding Tax Deducted: $200 (Calculated as 20% of the $1,000 base rate, not the $1,150).
- You Receive in Bank: $950
Paying contractors? Your withholding duties as the payer
If you hire contractors, the withholding duty sits with you. You must register as an employer with Inland Revenue, collect a completed IR330C from every contractor before the first payment, deduct tax at the rate shown on that form, and pay what you deducted to IRD.
Deduct on the GST exclusive amount, exactly as the calculator above does, and never deduct student loan repayments, KiwiSaver or ACC levies from schedular payments. Those are the contractor's responsibility, not yours. If a contractor has not given you an IR330C, use the no notification rate of 45 percent, or 20 percent where the contractor is a non resident contractor company.
Report every payment through payday filing. You can file per payday, or choose the twice monthly option for schedular payments: payments from the 1st to the 15th are treated as paid on the 15th, and payments from the 16th to month end are treated as paid on the last day of the month. File within 2 working days of each payday when you file electronically, or within 10 working days when you file on paper. Labour hire businesses face stricter rules still, because withholding is mandatory for their contractors even when the contractor operates through a company. Keep your wage records in New Zealand for seven years. If you fail to deduct, IRD can make you pay the missing tax yourself, plus late payment penalties and use of money interest. See IRD: tax schedular payments and file employment information.
How to choose your tax rate (IR330C)
When you start a new contract, your client is required to ask you to fill out an IR330C (Tax Rate Notification for Contractors). This form tells the client exactly what percentage to deduct from your pay.
While you can elect your own custom rate (down to a minimum of 10% for NZ residents, or 15% for non residents and temporary visa holders), IRD provides standard baseline rates depending on your industry:
Crucial warning: If you fail to provide an IR330C to your payer, they must deduct tax at the no notification rate of 45% (or 20% if you are a non resident contractor company). See IRD deductions from payments to contractors. Director fees sit under GST on directors fees and honoraria, and creative freelancers can also check GST for content creators and the industry specific GST category.
Non resident contractors and entertainers: the special rules
Non resident contractors who work in New Zealand are subject to schedular payment rules with a few important differences. The minimum rate you can elect is 15 percent rather than 10 percent, and this 15 percent floor also applies to temporary work visa holders.
Non resident entertainers and sportspeople have their own special rules, and if a non resident contractor company fails to provide an IR330C the no notification rate is 20 percent rather than 45 percent. Because the correct treatment depends on tax residency and on any double tax agreement, get advice before you set the rate on cross border work. Inland Revenue publishes dedicated guidance for non resident contractors, linked from the IRD overview of who gets schedular payments.
What Happens to Student Loans and ACC?
Unlike standard PAYE workers, withholding tax only covers your core income tax. It does not automatically cover your other obligations.
As an independent contractor, you are essentially self employed. Year end tax is on profit after expenses, not on each invoice alone. Model that picture with the self employed tax calculator, and read GST for contractors basics. This means:
- ACC levies: You will receive a separate bill from ACC each year for your earner's levy and working levy. For 2026/2027 the GST inclusive earner's levy is 1.75% (cap $156,641).
- Student Loans: Your client will not deduct 12% for your student loan. The 2026/2027 threshold is still $24,128. You must make voluntary repayments to IRD, or pay a lump sum at year end.
- KiwiSaver: You must set up voluntary contributions directly with your provider. See the IRD KiwiSaver guide.
Certificates of exemption, tailored rates and prescribed rates
A certificate of exemption (IR331) lets a qualifying contractor receive schedular payments with no tax deducted, paying everything at year end instead. To get one you apply to Inland Revenue and must show you are in business with a good record of filing returns and paying on time.
Two limits matter. First, contractors working through labour hire businesses cannot get a certificate of exemption, because withholding is mandatory in that sector. Second, if the standard rates do not suit you, you can apply to IRD for a tailored tax rate, which is the only way to use a rate below 10 percent.
The reverse also exists. If you fall behind on your tax obligations, Inland Revenue can impose a prescribed withholding rate on your schedular payments, which can include extra amounts to clear the debt. Choosing a realistic rate up front is far cheaper than having one imposed. See the IRD page on working out your tax rate for schedular payments.
Claiming Expenses and Getting a Tax Refund
Because withholding tax is calculated on your Gross Income, it does not take into account the costs you incurred to run your business.
At the end of the financial year (31 March), you will file an IR3 Individual Income Tax Return. Declare your total gross income and deduct legitimate business expenses (home office, vehicle mileage, tools, software). This reduces your taxable profit. Expense claim detail sits in claiming GST on a car or home office and the business and expenses GST category. If IRD requires instalments, use the provisional tax calculator.
Because your clients have been withholding tax on gross income all year, you will often have overpaid once expenses are factored in, so IRD then issues a tax refund.
A full year worked example: from invoices to a refund or a bill
Withholding tax is a prepayment, not the final bill. At year end your IR3 return compares everything your clients withheld against the tax on your actual profit, which is income minus deductible expenses. Here is how that plays out for the 2026/27 tax year.
A Wellington web developer earns $50,000 in schedular income and has 20 percent withheld, so her clients send $10,000 to IRD during the year. She claims $12,000 of deductible expenses for her home office, laptop and travel, leaving taxable income of $38,000. Tax on $38,000 comes to $5,558, made up of 10.5 percent on the first $15,600 ($1,638) and 17.5 percent on the remaining $22,400 ($3,920). Because $10,000 was already withheld, IRD refunds her the $4,442 difference.
The reverse happens when too little is withheld. A Christchurch tiler elects the 10 percent minimum on $80,000 of schedular income, so only $8,000 is withheld and he claims no expenses. His actual tax is $16,220.50: $1,638 on the first $15,600, $6,632.50 at 17.5 percent on the next $37,900, and $7,950 at 30 percent on the remaining $26,500. He owes IRD a further $8,220.50.
Both of these year end examples are income tax only; the ACC earners levy of 1.75 percent for 2026/27 sits on top as a separate payment.
Residual income tax is the tax left to pay after credits like withholding are subtracted. If it is $5,000 or more, IRD will generally require you to pay provisional tax in instalments the following year.
The three types of withholding tax in New Zealand
People search for a withholding tax calculator for a few different reasons, so it helps to know which tab you need. In New Zealand there are three main withholding taxes, all administered by Inland Revenue. Use the Schedular, RWT, or NRWT tab on the tool above, then read the matching section below for the full rules.
- Schedular payments: a flat rate deducted from contractor invoices, covered by the Schedular tab and the IRD schedular payments rules.
- Resident withholding tax (RWT): tax your bank or fund manager deducts from interest and dividends before it reaches you. Use the RWT tab above.
- Non resident withholding tax (NRWT): tax withheld from New Zealand interest, dividends, and royalties paid to people or businesses overseas. Use the NRWT tab above.
Resident withholding tax (RWT) on interest and dividends
If you have money in a New Zealand bank account, term deposit, or managed fund, your payer deducts resident withholding tax before paying you the interest. This is a separate system from schedular payments, but it is the answer most people want when they look for a resident withholding tax rate NZ calculator. You nominate the rate that matches your income tax rate, and your bank applies it. Pick a rate that is too low and you get a bill at year end; too high and Inland Revenue simply holds your money until you claim it back.
From 31 July 2024 the RWT rates on interest line up with the personal income tax brackets. If you have not given your payer your IRD number, tax is deducted at 45%. If you have given your IRD number but do not choose a rate, most people default to 33%. You can confirm your own position on the IRD using the right RWT rate page, and staff wages sit on the PAYE tax calculator instead.
A few extra rules are worth knowing. Companies that give their IRD number and company status may use 28%, 33%, or 39%, and 28% applies by default if no rate is chosen. Trustees and Maori authorities have their own options starting at 17.5%. Dividends are treated differently again: the RWT rate on dividends is a flat 33%, reduced by any imputation credits the company attaches. On a joint account you can only use one rate, so the highest earner usually picks the rate to avoid a surprise bill. To model the tax on the income behind the rate, the provisional tax calculator is a useful cross check for investors who pay in instalments.
RWT worked examples: interest, dividends and joint accounts
Resident withholding tax (RWT) is tax your bank or fund manager deducts from interest and dividends before the money reaches you. It is a prepayment toward your income tax, squared up when you file your return, not a final tax.
Say an Auckland saver earns $10,000 of term deposit interest and has nominated the 33 percent rate. The bank withholds $3,300 and pays $6,700 into the account. Had she nominated 17.5 percent to match a lower income, only $1,750 would have been withheld. Nominate too low a rate and you get a bill at year end; too high and IRD holds the extra until you claim it back.
Dividends work differently. The RWT rate on dividends is a flat 33 percent, reduced by any imputation credits the company attaches, which represent tax the company has already paid. A $1,000 dividend with no imputation credits attached has $330 withheld. On a joint account only one RWT rate can be used, so the higher earner usually chooses the rate, and where both holders gave the bank valid IRD numbers IRD splits the reported interest equally between the account holders in myIR, with either holder able to amend the split at year end. If you hold a valid RWT exemption, your IRD number sits on the RWT exempt status register and no tax is deducted. Confirm your own position on the IRD page on using the right RWT rate.
RWT or PIR: which rate applies to your investment
Banks and ordinary investment accounts use resident withholding tax. Portfolio investment entities (PIEs), including many KiwiSaver schemes and managed funds, use a prescribed investor rate (PIR) instead. Inland Revenue treats these as different tax clocks on the RWT hub: interest and dividends sit under RWT, while PIE income is taxed at the investor PIR for that fund type.
For New Zealand resident individuals the PIR options are 10.5%, 17.5%, and 28%. You cannot choose a PIR of 0% on the resident PIE page. The rate is based on your taxable income over the past two income years (including attributed PIE income). Under Inland Revenue IR861 for 2026/27, 10.5% needs taxable income excluding PIE of $15,600 or less and taxable income including PIE of $53,500 or less in either of those years; 17.5% needs taxable income excluding PIE of $53,500 or less and taxable income including PIE of $78,100 or less; otherwise 28% applies. If you do not give your PIE a PIR, 28% is the default.
A term deposit in a normal bank account uses the RWT tab above. The same dollars sitting inside a PIE use PIR with that provider, not RWT. Work out your rate on the IRD find your PIR page, then tell your fund. For KiwiSaver balance projections after fees and PIE tax, use the KiwiSaver calculator.
Non resident withholding tax (NRWT) on payments overseas
If your New Zealand business pays interest, dividends, or royalties to someone who lives overseas, you generally have to deduct non resident withholding tax before the money leaves the country. Inland Revenue calls these payments non resident passive income. As the payer you register for NRWT, deduct the correct amount, and send it to IRD. The detail sits on the IRD non resident withholding tax page and in the IR291 payer guide.
Under New Zealand domestic law the standard NRWT rates are 15% on royalties, 15% on interest, and up to 30% on dividends, although a fully imputed dividend paid to a corporate shareholder holding 80% or more can be 0% under some double tax agreements (a 10% holding typically gets 5%, for example under the New Zealand Australia agreement) and a fully imputed dividend to a smaller shareholder is usually 15%. There is also an approved issuer levy option of 2% that can replace NRWT on some interest paid to unrelated overseas lenders. Most of these rates are then reduced by a double tax agreement. For example, a payment to an Australian resident is often withheld at 10% on interest and 5% on royalties. Because treaty relief depends on evidence of residence, cross border payments usually need tailored advice before you settle on a rate.
NRWT worked example: paying interest and royalties overseas
Non resident withholding tax (NRWT) is tax a New Zealand payer deducts from interest, dividends and royalties paid to people or businesses overseas. Inland Revenue calls these payments non resident passive income.
The numbers change once a double tax agreement applies. A Dunedin software company pays $10,000 of interest to its Australian lender. The domestic NRWT rate is 15 percent, or $1,500, but the New Zealand Australia double tax agreement reduces it to the standard treaty rate of 10 percent (0 percent if the lender is a lending or finance business and the approved issuer levy is paid), so $1,000 is withheld and sent to IRD. On a $5,000 royalty to the same Australian resident, the domestic 15 percent ($750) drops to the treaty rate of 5 percent ($250).
Before any of this, the payer must register with IRD as an NRWT payer, deduct the correct amount and send it to IRD. An approved issuer levy of 2 percent can replace NRWT on some interest paid to unrelated overseas lenders. Because treaty relief depends on evidence that the recipient is resident in the treaty country, cross border payments usually need tailored advice before you settle on a rate. See IRD: non resident withholding tax.
A note on overseas withholding calculators
This is a New Zealand tool built on Inland Revenue rules, so it does not model overseas payroll systems. If you are looking for a federal or state income tax withholding calculator, a W-4 paycheck estimator, an ATO PAYG withholding calculator for Australia, a BIR withholding tax calculator for the Philippines, or a CRA non resident withholding calculator for Canada, those belong to a different tax authority and use different brackets. For New Zealand income tax on wages, the PAYE tax calculator is the right starting point, and the GST calculator handles the 15% on your invoices.
Frequently Asked Questions
Is Withholding Tax the same as PAYE?
No. Use this page if your client deducts a flat rate from a contractor invoice (schedular payments). Use the PAYE tax calculator if you are on wages or salary with a tax code (M, ME, SB, and so on). PAYE changes with how much you earn in a pay period. Withholding is a flat percentage of the GST exclusive amount as a prepayment toward your IR3 bill.
I invoice clients. Which tools do I use together?
Create the tax invoice with the GST invoice generator, check 15% GST on the GST calculator, then use this withholding calculator for what the payer should deduct. If IRD puts you on instalments later, use the provisional tax calculator.
Can I choose a 0% Withholding Tax rate?
Inland Revenue requires a Certificate of Exemption (IR331) if you want 0% deducted from your schedular payments. You must apply directly with IRD, proving you have a good record of filing returns and paying on time.
What if my Withholding Tax rate is too high?
If your expenses are high (meaning your actual profit is low), the standard 20% deduction might mean you are overpaying tax throughout the year. You can supply your client with a new IR330C electing a lower custom rate (minimum 10% for NZ residents, 15% for non residents and temporary visa holders).
What resident withholding tax (RWT) rate should I choose?
Use the RWT tab on the calculator above. Your RWT rate on interest should match your income tax rate: 10.5% up to $15,600, 17.5% to $53,500, 30% to $78,100, 33% to $180,000, and 39% above that. Companies may use 28%, 33%, or 39%. If you do not give your bank an IRD number, tax is deducted at 45%, and dividends are taxed at a flat 33%. Check your position on the IRD RWT rate page.
What is non resident withholding tax (NRWT)?
Use the NRWT tab on the calculator above. NRWT is tax withheld from New Zealand interest, dividends, and royalties paid to non residents. Standard domestic rates are 15% on interest and royalties and up to 30% on dividends, though fully imputed dividends and double tax agreements often reduce this. An approved issuer levy of 2% can replace NRWT on some interest. See the IRD NRWT guidance.
I run a labour hire firm. Is withholding tax mandatory for my contractors?
Yes. Withholding is mandatory for contractors paid through a labour hire business, even when the contractor operates through their own company. Your contractors also cannot obtain a certificate of exemption, and you must report every payment through payday filing.
What happens if a payer fails to deduct withholding tax?
Inland Revenue can require the payer to pay the missing tax out of its own pocket, and late payment penalties plus use of money interest apply from the date the tax was due. Keeping a completed IR330C on file for every contractor is the simplest protection.
Can I choose a rate below the 10 percent minimum?
Not on your own. The 10 percent minimum for New Zealand residents, and 15 percent for non residents and temporary visa holders, can only be beaten by applying to Inland Revenue for a tailored tax rate with evidence such as high deductible expenses. If IRD is satisfied, it will issue a rate that suits your situation.
What is a voluntary withholding agreement?
It is a written agreement between you and your payer to treat payments as schedular payments even when the work is not on the schedular list. You then complete an IR330C and the payer withholds at your chosen rate, which gives both sides certainty about the tax for the 2026/27 year.
Does Inland Revenue have a tax rate estimator for contractors?
Yes. Inland Revenue publishes a tax rate estimation tool for contractors on the page for working out and declaring your schedular tax rate. IRD says it takes about 10 minutes and helps you choose your own rate to put on an IR330C. A chosen rate must still be at least 10% for New Zealand residents, or 15% if you are a non resident on a temporary work or entry visa. A rate below those floors needs a tailored tax rate from IRD, not the estimator alone. Use this calculator for the invoice math once you know the rate.