What is the Independent Earner Tax Credit and how do I claim it?
If you earn between $24,000 and $70,000 and receive no other government support, Inland Revenue will give you up to $520 a year. Plenty of people who qualify never see it, for one simple reason: their tax code is wrong.
The Independent Earner Tax Credit — almost always shortened to IETC — is a tax credit for people on modest incomes who are not getting help from anywhere else. It is not a benefit, you do not apply for it on a form, and it is not means-tested against your savings. It is simply a reduction in the income tax you pay.
It is worth $520 a year, or $10 a week. That is not life-changing money, but it is yours, and it costs nothing to claim.
Who qualifies
You are eligible for a full or partial IETC if all of the following are true:
- Your annual income is between $24,000 and $70,000
- You are a New Zealand tax resident
- You are not receiving a main benefit, NZ Super, a veteran’s pension, or an overseas equivalent
- Neither you nor your partner receives Working for Families tax credits
That last condition catches a lot of people out. If your partner claims Working for Families for your children, neither of you can claim the IETC — even if your own income sits squarely in the range.
- Worth up to $520 a year, or $10 a week
- Full amount if you earn $24,000 to $66,000
- Reduces by 13 cents per dollar above $66,000, gone at $70,000
- Claimed through the ME tax code, or at year end
- Not available alongside a benefit, NZ Super or Working for Families
How much you actually get
The full $520 applies right up to $66,000. Above that it abates — it reduces by 13 cents for every dollar you earn over $66,000 — until it disappears entirely at $70,000.
| Your annual income | IETC you receive |
|---|---|
| Under $24,000 | $0 |
| $24,000 – $66,000 | $520 |
| $68,000 | $260 |
| $69,000 | $130 |
| $70,000 and above | $0 |
The arithmetic on the middle rows is straightforward: at $68,000 you are $2,000 over the threshold, so the credit drops by $2,000 × 13c = $260, leaving $260.
The tax code is where it goes wrong
The IETC is not applied automatically during the year. It comes through your tax code, and you have to be on the right one.
Most people fill in an IR330 on their first day at a job, tick M because it looks like the normal option, and never think about it again. If your income later lands in the IETC range, nothing prompts you to change it. You simply pay $520 a year more tax than you need to.
Fixing it takes about five minutes: complete a new IR330 tax code declaration for your employer with ME (or ME SL), and your PAYE drops from the next pay.
What if you have already missed a year?
You have not lost it. At the end of each tax year Inland Revenue issues an income tax assessment, and if you were entitled to the IETC but were on the wrong code, the credit is normally picked up then and refunded.
Normally. It is worth checking rather than assuming — particularly if your income moved in or out of the range partway through the year, or if you had more than one job. You can go back and request an amendment for previous years through myIR if the credit was missed.
Eligibility is based on your total income for the tax year, not what you earn in any one pay period. A bonus, a second job or a few months of overtime can push you over $70,000 and remove the credit entirely — and IRD will square that up at year end.
A worked example
Sam earns $58,000 a year, has no student loan, contributes 3.5% to KiwiSaver and gets no Working for Families. On an M tax code, Sam pays $9,620.50 of income tax across the year. On the correct ME code, that drops to $9,100.50 — the full $520 credit, or about $10 a week extra in the bank.
You can see the effect on your own numbers with our free PAYE calculator. Switch the Independent Earner Tax Credit toggle on and off, and watch the take-home figure and the tax code change.
The bottom line
The IETC is one of the easiest pieces of money to leave on the table. It requires no application and no paperwork beyond a tax code declaration you can complete in a few minutes. If your income sits between $24,000 and $70,000 and you get no other government support, check your payslip today: if it says M rather than ME, you are very likely paying too much tax.
This guide is general information current at August 2026, not personal tax advice. Rates and thresholds are from Inland Revenue. Your own position may differ — check with us or in myIR before acting.
Not sure your tax code is right?
We check tax codes, KiwiSaver settings and past assessments for New Zealand employees and business owners every week. If you are owed a refund, we will find it. The first conversation is free.
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