Estimate your NZ tax refund or underpayment for the year.
Estimated refund (positive) or underpayment
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Actual tax liability
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PAYE withheld
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IETC credit
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Annual income
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Your breakdown
Updates live as you type
Item
Amount
Why PAYE and actual tax often differ
PAYE is withheld by your employer each pay period based on an assumption that you will earn that rate of income for the full year. If you start a job mid-year, change jobs, or work part time, the annualised assumption is wrong and the withholding ends up too high or too low. A common case is someone who changes employers: their first employer withheld PAYE assuming a full year of income at that salary, and the second employer did the same. The combined withholding can substantially exceed the actual annual liability, producing a meaningful refund.
The automatic assessment process
IRD automatically assesses most individual taxpayers after 31 March each year. It pulls income data from employers and interest payers, applies the correct tax calculation, and either issues a refund or sends a notice of an amount owing. For straightforward salary earners, no action is required: the refund appears in your bank account, or a small underpayment is requested by notice. You can also log in to myIR to check the assessment and confirm or dispute the figures before the refund is issued.
Common reasons for a larger than expected refund
Receiving a bonus late in the year causes over-withholding because payroll models it as a continuation of a higher income rate. Working overseas for part of the year may leave you with a refund on NZ income. Part-year employment when you move to or leave New Zealand means your annualised PAYE exceeds your actual NZ liability. Donations and the IETC can also produce refunds if they were not factored into your PAYE code. In all these cases, the automatic assessment should catch the over-withholding without you needing to file a separate return.
Frequently asked questions
Why would I get a tax refund in New Zealand?
A refund arises when more PAYE was deducted from your pay during the year than your actual annual tax liability. Common reasons include changing jobs mid-year (so payroll models a higher annualised income), working only part of the year, receiving a bonus that pushed up the withholding rate, or having the wrong tax code set. Inland Revenue runs automatic assessments for most salary earners after 31 March and issues refunds automatically.
How does IRD calculate my actual tax liability?
After 31 March, IRD totals all your income from employers, interest, dividends, and other sources. It applies the progressive income tax brackets at the rates in force for the year (10.5%, 17.5%, 30%, 33%, 39%) and subtracts any tax credits such as the Independent Earner Tax Credit or donation rebate. The difference between this liability and the PAYE already withheld determines your refund or bill.
What tax code should I use at my main job?
Most employees with one job and no student loan use the M tax code. M includes the Independent Earner Tax Credit for incomes between $24,000 and $48,000. If your only income is from one job, M is almost always correct. Using the wrong code (for example, SH when you should be on M) leads to over-withholding and a refund at year end. Use the IRD tax code guide or the IRD website to confirm the right code.
How long does a NZ tax refund take?
For automatic assessments processed by IRD after 31 March, most refunds are issued within a few weeks of the assessment being completed, typically by June or July. If you file a return yourself rather than receiving an automatic assessment, refunds usually process within 10 to 15 working days of the return being accepted. Refunds are paid directly to the bank account linked to your myIR account.