Student Loan Tax
Updated for 2026 IRD rates
How Student Loan Repayments Work
If you have a New Zealand student loan, you must make repayments once your income exceeds the repayment threshold. Repayments are collected through the tax system — your employer deducts them from your pay via PAYE (for employees), or you make them through your annual tax return (if you're self-employed). The interest on New Zealand-based student loans is set at 0% for borrowers living in New Zealand.
Repayment Threshold and Rates
For the 2026 tax year:
- Repayment threshold: $24,456 per year ($470 per week or $2,038 per month) before tax
- Repayment rate: 12% of every dollar earned above the threshold
- Voluntary repayments: You can make additional voluntary repayments at any time without penalty
If your income is below the threshold, no repayments are required. However, you can still make voluntary repayments to reduce your loan balance faster.
Student Loan Deductions Through PAYE
If you're an employee, your employer deducts student loan repayments from your wages or salary through the PAYE system. The deduction is calculated as 12% of your gross earnings above the weekly or fortnightly repayment threshold. Your employer uses your tax code to determine whether to make deductions — use the 'M SL' or 'S SL' tax codes as appropriate.
Self-Employed Student Loan Repayments
If you're self-employed, you don't have an employer to make deductions. Instead, you must make student loan repayments through your annual tax return. The repayment is calculated as 12% of your business profits (after expenses) above the threshold. You may need to include an estimate of your student loan repayment in your provisional tax payments.
Overseas Borrower Obligations
If you move overseas, your student loan obligations change significantly:
- Interest: Interest of 3.9% per annum applies to your loan from the date you leave New Zealand
- Repayment threshold (overseas): If you're overseas for 6 months or more, the repayment threshold is based on your overseas income, but you still need to make compulsory repayments
- Overseas-based borrower levy: An additional levy of $322 per year (2026 rate) for borrowers who have been overseas for more than 6 months
- Reporting: You must advise IRD of your overseas address and income details
Failure to comply with overseas repayment obligations can result in penalties and the loan being referred to a collection agency.
Student Loan and Your Tax Return
Your student loan balance and repayment history are available through myIR. At the end of the tax year, IRD reconciles the total repayments made against your actual liability. If too much was deducted, you'll receive a refund credited to your student loan account. If too little was deducted (e.g. because of multiple jobs or incorrect tax code), you'll need to pay the shortfall.
Student Loan and KiwiSaver
Your KiwiSaver contributions are deducted from your gross pay before the student loan repayment calculation. This means you won't pay student loan repayments on the portion of your salary that goes to KiwiSaver. However, employer KiwiSaver contributions are not included in your income for student loan purposes.