The Independent Earner Tax Credit (IETC) is a tax credit for middle-income earners who don't receive certain other government support. If you're eligible it can add up to $520 a year to your take-home pay.
How much is it worth?
- $24,000 – $66,000 income: the full $520 a year ($10 a week).
- $66,001 – $70,000: it reduces by 13 cents for every dollar over $66,000, reaching zero at $70,000.
- Under $24,000 or over $70,000: no IETC.
Who can claim it
You must be a New Zealand tax resident earning within the range above. You can't get the IETC for any month you (or your partner, for some payments) receive:
- Working for Families tax credits;
- an income-tested benefit;
- New Zealand Superannuation or a Veteran's Pension (or an overseas equivalent).
Which tax code?
To receive the IETC through your pay, use the ME tax code (or ME SL if you also have a student loan). If you use the plain M code you won't get the credit in your pay — though you may still receive it as a lump sum after the tax year ends if you were eligible.
Worked example
On a $50,000 salary using the ME code, you receive the full $520 credit, so your annual take-home is about $520 higher than it would be on the M code. On $68,000, the credit reduces to $520 − (($68,000 − $66,000) × 13%) = $260.
Check your code
Switch between the M and ME tax codes in the NZ Pay Calculator to see the IETC applied to your take-home pay.