Secondary Tax Explained

The myth: "I picked up a second job and it is taxed at 30%, so it's barely worth doing." The reality: New Zealand taxes your total annual income at graduated rates. It does not care how many employers paid it to you.

The problem secondary codes solve is a mechanical one. Each employer only sees the pay they give you. If both applied the main-job scale, both would start you at 10.5% and both would give you the lower bands — so between them they would deduct far too little, and you would get a bill at the end of the year. A flat secondary rate stops that.

Add SL to any of these if you have a New Zealand student loan — for example S SL or SH SL. The secondary tax calculator picks the code from your combined income and shows the deductions.

Say your main job pays $60,000 and you take a second job paying $15,000. Combined income is $75,000, which puts you in the SH band, so the second job uses code SH at a flat 30%.

The flat rate lands close to the true figure, and Inland Revenue's end-of-year assessment settles the difference either way. The important point: the total tax on $75,000 of income is $14,721 whether that money came from one job or two.

Two genuine effects sit underneath the myth, and neither is a penalty:

• Those dollars really are your top dollars. Your main job used the 10.5% and 17.5% bands. Extra income stacks on top, so it is taxed at your marginal rate — 30% or 33% for many people. It would be taxed identically if your employer simply paid you more.
• The student loan threshold is already used up. If you use an SL code on the second job, 12% typically comes out from the first dollar, because the annual repayment threshold was consumed by your main job. See the student loan repayment calculator.

You are most likely to be over-deducted — and therefore due a refund — when:

• you chose a code based on expected hours, then worked fewer of them;
• the second job was short-term, so your actual annual total fell into a lower band;
• you left your main job partway through the year but kept the secondary code in place.

You do not need to claim it. Inland Revenue issues an income tax assessment after 31 March; if you have overpaid, the refund goes to the bank account on your myIR record. If your circumstances change mid-year, though, it is better to update the code with a new IR330 than to wait — see which tax code should I use.

The example figures are computed in your browser using the current New Zealand PAYE brackets: 10.5% to $15,600, 17.5% to $53,500, 30% to $78,100, 33% to $180,000 and 39% above. The "true extra tax" is simply the PAYE on combined income minus the PAYE on the main job alone.

Secondary code thresholds follow Inland Revenue's secondary tax codes and rates, checked on the review date below. This is general information about how the system works, not tax advice for your situation.