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Student Loan Repayments in New Zealand
If you have a student loan in New Zealand, you are required to make compulsory repayments once your annual income exceeds a certain threshold. These repayments are deducted directly from your salary or wages by your employer, using the 'SL' tax code. This calculator helps you estimate how much will be deducted based on your total taxable income, loan balance, and the current official repayment threshold.
How Student Loan Repayments Are Calculated
The rules are set by the Student Loan Scheme Act 2011 and administered by Inland Revenue (IRD). The calculation is straightforward:
- Determine your annual gross income: This includes your salary, wages, and all other taxable income that is subject to student loan repayments.
- Apply the annual repayment threshold: For the 2026-27 tax year (1 April 2026 to 31 March 2027), the threshold is $24,816. You only make repayments on the portion of your income that is above this amount.
- Apply the repayment rate: You pay 12% of your income that is above the threshold. This rate is fixed by law.
Your employer will calculate and deduct this amount from each pay period (weekly, fortnightly, or monthly) based on your pay frequency.
Worked Example
Sam has a student loan balance of $28,000 and earns an annual salary of $65,000.
- Annual Gross Income: $65,000
- Minus Annual Threshold: $65,000 - $24,816 = $40,184
- Repayable Income: $40,184
- Annual Repayment: 12% of $40,184 = $4,822.08
- Fortnightly Deduction: $4,822.08 / 26 = approximately $185.46
Each fortnight, Sam's employer will deduct about $185.46 and send it to IRD. After one year, Sam's loan balance would be reduced to approximately $23,177.92, assuming no other changes.
Common Scenarios
- Income Below the Threshold: If your annual income is at or below the repayment threshold, you will not have any compulsory deductions. However, you can still make voluntary repayments.
- Multiple Jobs: If you have more than one job, each employer will deduct repayments based on the income you earn from them. It's important to ensure you are using the correct tax code (SL) for all jobs to avoid underpayment.
- Changing Income: If your income changes during the year (e.g., a pay rise, reduced hours), your deductions will adjust accordingly in subsequent pay periods.
Next Steps and Documentation
Understanding your repayment obligations is crucial for financial planning. If you are starting a new job, your employer will need to know your correct tax code. The Individual Employment Agreement or Employment Offer Letter should clearly state your salary and any agreed deductions. It's good practice to confirm that the 'SL' student loan deduction code is correctly applied in your payroll setup.
If your income or employment situation changes, you may need to update your details with your employer and IRD. Keep track of your loan balance and statements through myIR, the online portal for Inland Revenue.