Tax Code
A code that tells your employer how much tax to deduct from your pay. Most people are on 'M' (main income). If you have a second job, use 'S' or 'SH'. Wrong code = surprise tax bill.
Your tax code tells your employer which PAYE rate to apply to your salary. The most common codes are:
- **M** — Main job with income under $14,000 - **ME** — Main job with income $14,001-$48,000 - **M SL** — Main job with student loan - **S** — Secondary job - **SH** — Secondary job earning over $48,000 total - **CAE** — Casual agricultural worker
If you only have one job, you'll typically be on 'M' or 'ME'. If you have a side job, that second employer should use 'S' or 'SH' to ensure enough tax is deducted.
Getting your tax code wrong is one of the most common causes of unexpected tax bills in New Zealand.
Why this matters
If you've recently started a second job, freelancing, or contracting alongside your main job, check your tax code immediately. Using 'M' on both jobs means neither employer is deducting enough tax, and you'll get an unpleasant bill from IRD at the end of the year. It's a simple fix but one that catches many people out.
Related Tax terms
RWT (Resident Withholding Tax)
Tax automatically deducted from your bank interest and dividends. Your bank withholds it before you see the money. Rate depends on your income (10.5% to 33%). Check your rate is correct with IRD.
PAYE (Pay As You Earn)
Income tax deducted from your salary by your employer each pay period. Most NZ employees don't need to file a tax return because PAYE handles it.
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