Your first paycheque: tax codes, PAYE and KiwiSaver explained

Your first proper pay lands in your account and it's smaller than you worked out in your head. Everyone has that moment. The gap between what you earned and what you actually got is tax, ACC, maybe a student loan repayment and maybe KiwiSaver, and every one of those lines is on your payslip for a reason. Once you know what they mean, the payslip stops being a mystery and starts being something you can check, which matters, because mistakes do happen.

Before you start: IRD number and tax code

Your employer will ask for two things before your first pay: your IRD number and a tax code declaration (the IR330 form, or the online version your workplace uses).

Your IRD number is your personal number with Inland Revenue. You keep the same one for life, so if you got one as a kid for a savings account, that's still yours. If you've never had one, you can apply through Inland Revenue's website.

Your tax code tells your employer how much tax to take out. Getting it wrong is the most common reason first paycheques look strange.

The codes you're most likely to use

• M: for your main job, the one where you earn the most. Most people with one job use M.
• M SL: the same, but you have a student loan. The "SL" tells your employer to take loan repayments out of your pay as well.
• Secondary codes (SB, S, SH, ST, SA): for a second job. Which one you pick depends on your estimated total income for the year across all your jobs. Only one job should be on an M code.

If you don't give your employer a tax code at all, they have to deduct tax at the non-declaration rate, which is 45% at the time of writing. That's a lot of your pay gone for no good reason, so fill in the form on day one. There are a few other codes for special situations, so if your job is unusual, check with your employer or Inland Revenue.

Reading your payslip, line by line

Payslips look different from workplace to workplace, but most have the same bones.

• Gross pay: what you earned before anything comes out. Hours times your hourly rate, plus any extras like overtime or holiday pay.
• PAYE: "pay as you earn". This is your income tax, taken out each payday so you don't get a giant bill at the end of the year. The ACC earners' levy, which helps pay for injury cover, is collected through PAYE as well, so you usually won't see it as a separate line.
• Student loan: if you're on M SL, repayments come out once your pay goes over the repayment threshold for that pay period. Earn under it, and nothing comes out that week.
• KiwiSaver: your contribution, shown as a percentage of your gross pay.
• Net pay: what's left. This is the number that hits your bank account.

The rates for income tax change from time to time, so instead of memorising them, check the current numbers on Inland Revenue's tax rates page. New Zealand uses a stepped system: each slice of your income is taxed at its own rate, so earning a bit more never means you take home less overall.

Quick checks worth doing

Keep your payslips, even if they're just emails. Each time, check your hours are right, your hourly rate matches your employment agreement, your tax code is the one you chose, and KiwiSaver is coming out if you're a member. If something looks off, ask payroll politely. Most errors are honest ones and easy to fix early.

KiwiSaver, without the jargon

KiwiSaver is a long-term savings scheme. Money goes in from your pay, often from your employer, and sometimes from the government, and it's invested in a fund you choose. You generally can't touch it until you're 65, with a couple of big exceptions, including buying your first home.

Will I be signed up automatically?

If you're starting a new job, you're 18 or older and under 65, and you're not already in KiwiSaver, your employer generally has to enrol you automatically. Some jobs, like certain casual or temporary roles, are exceptions, but you can still choose to join.

If you've been automatically enrolled and don't want to be in, there's an opt-out window: from day 14 to day 56 after you start the job (roughly the end of week two to the end of week eight). Opting out isn't always the right call, though, because you'd miss out on your employer's contributions. If you're under 18, different rules apply, so check the details with Inland Revenue.

How much goes in?

You choose your contribution rate from the options Inland Revenue sets. The default rate went up from 3% to 3.5% for both employees and employers from 1 April 2026, and it's scheduled to rise again to 4% from 1 April 2028. Members can apply to temporarily drop to a lower rate for a set period if money is tight. Since these numbers have been changing, the safest move is to check the Inland Revenue KiwiSaver page for the current rules.

Two other changes are especially relevant if you're young:

• 16 and 17-year-olds became eligible for government contributions from 1 July 2025, and for employer contributions from 1 April 2026, as long as they meet the other eligibility rules.
• The government contribution was reduced from 1 July 2025. It's now 25 cents for each dollar you put in over the year, up to a yearly maximum, and people on very high incomes don't qualify.

Picking a fund

If you don't pick a provider and fund, you'll be put into a default one. That's fine to start, but it's worth looking. Funds range from conservative (smaller ups and downs) to growth (bigger swings, usually higher returns over a long time). If you're 18 and won't touch the money for decades, the timeframe is on your side, but it's your call. Sorted has free, independent tools for comparing funds and fees, with no sales pitch attached.

KiwiSaver and your first home

After at least three years in KiwiSaver, you may be able to withdraw most of your savings to help buy your first home, as long as you'll live in it. You have to leave $1,000 in the account. Your provider handles the application. It's a long way off for most people reading this, but it's a good reason to start early.

A few habits that make life easier

• Read your employment agreement so you know your rate and pay cycle. There's more on work and money in our life section.
• Set up an automatic transfer of a small amount into savings on payday, before you can spend it.
• Check your myIR account once a year. At the end of the tax year, Inland Revenue works out whether you've paid the right amount. Students with part-time jobs sometimes get a refund.
• Ask questions. Payroll staff answer these every day. Nobody expects you to know it all on your first pay.

Your first paycheque is small, but it's the start of a habit. Understanding where your money goes, from day one, is a quiet superpower.