Overtime pay, gross and after tax.
Overtime pay (gross)
—
Overtime hourly rate
—
After-tax value
—
Your breakdown
Updates live as you type| Step | Working | Amount |
|---|
There is no legal right to overtime rates in New Zealand
This catches a lot of people out, especially those who have worked overseas. New Zealand law does not require an employer to pay time-and-a-half or double time. Whether you get a premium for extra hours depends entirely on what your employment agreement says. Many agreements, particularly in unionised, shift-based or trade work, do provide for penal rates, but plenty of salaried roles pay nothing extra at all. So the first thing this tool asks you to do is read your contract and enter the multiplier that actually applies to you, rather than assume one.
Once you know your multiplier, the calculation is the easy part. Your overtime hourly rate is your base rate times the multiplier, and gross overtime pay is that rate times the hours. The interesting question is how much of it you keep, which is where tax comes in.
Ten hours at time-and-a-half on a $35 base
Suppose you earn $35 an hour and work 10 hours of overtime at time-and-a-half. Your overtime rate is $52.50 an hour, which the calculator rounds to a $53 display, and the gross is $525. If those dollars sit in your 30 percent marginal band, PAYE takes 30 percent and you keep $368.
The chart shows the gross $525 split into the $368 you keep and the $158 that goes to IRD as PAYE.
Overtime is not taxed at a penalty rate
A persistent myth is that overtime is taxed more harshly than normal pay. It is not. There is no special overtime tax rate in New Zealand. What happens is that overtime stacks on top of your regular income, so it is taxed at your marginal rate, the rate that applies to your top dollars. If your salary already has you in the 30 percent band, every overtime dollar is taxed at 30 percent. If overtime pushes part of your income across a threshold, the portion above the threshold is taxed at the higher rate, but only that portion. The brackets run 10.5 percent, 17.5 percent, 30 percent, 33 percent and 39 percent, and overtime simply fills from wherever your ordinary pay left off.
Set the marginal rate field to match the band your overtime falls into. A useful gut check: someone on $70,000 is in the 30 percent band, so their overtime is taxed at 30 percent; someone over $180,000 keeps barely 61 cents in the dollar of theirs. That is the real reason overtime feels less rewarding for higher earners, not any special treatment. One thing this tool keeps simple on purpose is that it applies your marginal rate to the gross and does not separately deduct the ACC levy, so for a precise net you can run the figure through a full take-home calculator.
Does overtime affect my holiday pay?
It can. Holiday pay is calculated on your gross earnings, and regular overtime usually counts as part of those earnings, so consistent overtime can lift the value of your annual leave. Genuinely occasional, one-off overtime is treated differently. If overtime is a steady feature of your work, it is reasonable to expect it reflected in your holiday pay, and it is worth checking your payslip does so.
Should I salary sacrifice overtime into KiwiSaver?
You cannot redirect a one-off overtime payment after the fact, but if your KiwiSaver contribution is a percentage of gross pay, then overtime automatically increases the dollar amount going into your fund that period, and your employer’s matching contribution rises with it. For a higher earner, channelling extra earnings towards retirement saving can be a sensible use of money that would otherwise be taxed at 30 or 33 percent today.