Student Loan Repayments in New Zealand (2026–27)

The $24,128 repayment threshold and the 12% rate

The compulsory repayment is 12% of your income above $24,128 a year. Income below the threshold is ignored, so the repayment only starts once you earn more than that, and it grows by 12 cents for each extra dollar. Inland Revenue lists the same $24,128 threshold for the 2025 and 2026 tax years, and the 2026–27 payroll specification repeats it, so the figure has not moved since 2024.

Your employer works the threshold out per pay rather than per year: $464 a week, $928 a fortnight, $1,856 every four weeks or $2,010.66 a month. Each pay, 12% of the amount over that figure is deducted, alongside PAYE and the ACC earners' levy. Because repayments are worked out one pay at a time, a bonus or a large overtime pay can attract a repayment even if your annual income ends up near the threshold.

Worked example: student loan deductions on a fortnightly salary

A graduate on $60,000 paid fortnightly earns $2,307.69 a pay. The payroll formula drops the cents, subtracts the fortnightly threshold of $928.00 and takes 12% of the rest, so $165.48 goes to the loan each payday. Over 26 pays that is roughly $4,302, matching the annual calculation of $4,305.

The same pay also loses $433.48 to PAYE and the ACC levy, leaving $1,708.73 before KiwiSaver. At this salary the loan repayment is bigger than a 3.5% KiwiSaver contribution ($80.76 a fortnight). Inland Revenue's own example uses a $600 weekly wage: $600 less the $464 threshold leaves $136, and 12% of that is $16.32. You can test your own figures with the PAYE calculator, which applies the same rounding rules.

Using the SL tax code on your IR330

If you have a student loan and earn salary or wages, Inland Revenue says you must add "SL" to your tax code. You do this on the Tax code declaration (IR330) you give each employer, so a main job becomes "M SL" (or "ME SL" if you also get the independent earner tax credit) and a second job becomes something like "S SL".

Leaving SL off does not make the debt go away. Inland Revenue calls the shortfall a significant under-deduction. It sends your employer a student loan extra deduction notice, which adds 5% on top of the normal 12%: 5% of pay over the pay-period threshold on M SL or ME SL, or 5% of every dollar on a secondary code. On a $600 week that is an extra $6.80. The usual cause is a new job: people fill in a fresh IR330, tick the main code and forget the SL suffix.

• Main job: M SL or ME SL, with the per-pay threshold applied.
• Secondary job: SB SL, S SL, SH SL, ST SL or SA SL, with 12% taken from every dollar.
• Benefit income: the Ministry of Social Development does not deduct repayments from a benefit, which stays on code M.

Second jobs: why every dollar is taxed at 12%

The repayment threshold does not apply to a secondary job because it has already been used up by your main job. A second job paying $200 a week on an S SL code loses $24.00 a week to the loan, 12% of the whole pay.

If your main job pays less than its pay-period threshold, part of the threshold is wasted while the second job is still charged on every dollar. Inland Revenue has two fixes. A special deduction rate lets the unused threshold from your main job count against secondary income; it also helps people who get a benefit and earn a little on the side. A repayment deduction exemption may suit you if you earn over the pay-period threshold in some pays but expect to finish the year under $24,128, for example a student with a summer holiday job.

Self-employed, rental or other income: end-of-year repayments

Income that is not salary or wages is collected after the year ends. Inland Revenue calls it "adjusted net income": self-employed, rental, interest and similar income, less expenses. You have an end-of-year repayment obligation when that adjusted net income is $500 or more and, added to any salary and wages, takes you over the $24,128 threshold.

Example: you earn $40,000 in wages and $8,000 net from a weekend photography business. Your employer deducts $1,904.64 through the year. Your total obligation is 12% of $48,000 less $24,128, which is $2,864.64, so $960.00 is left to pay. End-of-year repayments are due on 8 February in Inland Revenue's calendar, after your income tax assessment is processed.

If the end-of-year amount is $1,000 or more, you will also be asked to make interim repayments during the following year, with Inland Revenue's calendar showing 15 January as an interim date. In the example, $960.00 is under $1,000, so no interim payments apply yet. A bigger side business would tip it over.

Interest-free while you are New Zealand-based

New Zealand-based borrowers pay no interest. What matters is presence, not citizenship. Under Inland Revenue's 32-day rule, you remain New Zealand-based if you are in the country for at least 32 days in any 184-day period, and you cannot be away for more than 152 days in a row. Be overseas for around five out of six months and you will usually become overseas-based.

If you do become overseas-based, interest is backdated to the day after you first left, not the day the 184-day period ends. A loan of $20 or more at 31 March is charged a $40 administration fee each year, even while it is interest-free (except in a year you paid an establishment fee). Some reasons for being overseas let the loan stay interest-free, so check Inland Revenue's list before you go.

Overseas-based borrowers: fixed repayments and interest

Once you are overseas-based, the 12%-of-pay rule stops and you owe a fixed yearly amount set by your loan balance, paid in two halves by 30 September and 31 March. Interest is charged at 5.6% for 2026–27 (it was 4.9% for 2025–26). It is worked out daily but added to the loan after 31 March. If a payment is missed and the overdue amount is $334 or more, late payment interest of 9.6% is charged on it, reduced to 7.6% if you keep to an instalment plan. The minimum repayment never falls as the balance shrinks, but it can rise if the balance moves into a higher band.

With a $38,000 balance you owe $3,000 a year, $1,500 by each date. A full year's interest at 5.6% is about $2,128, so only around $872 of the $3,000 actually reduces the debt. Inland Revenue warns that at the current rate, minimum repayments no longer cover the interest once a loan is over $89,285.

The "Travelling overseas" section of your student loan account in myIR shows your departure and arrival dates, so you can see when interest will start. You can also apply there for a temporary repayment suspension: up to 12 months with no overseas-based repayments, applied for before you leave or within 6 months of leaving. You must name an alternate contact person who lives in New Zealand and is 18 or older, and interest is still added during the break.

Common student loan mistakes

Most surprise bills come from one of these four mistakes.

• Forgetting SL on a new IR330: the deductions stop but the obligation does not.
• Ignoring side income: freelance, ride-share or rental profit of $500 or more can create an end-of-year repayment.
• Assuming a long OE is harmless: break the 32-day rule and interest is backdated to the day after you left, and repayments switch to the overseas schedule.
• Paying from overseas at the last minute: a money transfer that has not cleared by the New Zealand due date counts as late.