Redundancy Tax Calculator
See how much tax comes out of your NZ redundancy payment — and what actually lands in your bank account.
Tax Breakdown
Good news: No ACC earners' levy and no KiwiSaver deductions come out of a redundancy payment. Not sure what your redundancy payment should be? Try the Redundancy Pay Calculator first.
⚠️ Legal Disclaimer: This tool provides an estimate only and does not constitute financial, tax, or legal advice.
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Frequently Asked Questions
How tax on redundancy payments works in New Zealand.
How is redundancy pay taxed in NZ?
Redundancy compensation is taxed as an 'extra pay' — a lump sum. Instead of the usual graduated PAYE, a single flat rate applies to the whole payment, based on your recent income plus the lump sum: 10.5%, 17.5%, 30%, 33% or 39%.
Is any part of a redundancy payment tax-free in New Zealand?
No. There is no tax-free portion of redundancy pay in NZ — the old redundancy tax credit was scrapped back in 2011. The full amount is taxable income.
Why does my redundancy seem taxed at a higher rate than normal?
Because the lump sum is added on top of your other income for the year, it's often taxed at your highest marginal rate. If the flat rate deducted turns out to be too high for your actual annual income, IRD's automatic end-of-year assessment will refund the difference.
Do ACC levies come out of redundancy pay?
No. Redundancy payments (and retirement payments) are exempt from the ACC earners' levy, which saves you 1.75% compared to normal wages.
Does KiwiSaver get deducted from my redundancy payment?
No. Redundancy payments are specifically excluded from 'gross salary or wages' for KiwiSaver purposes, so neither your contribution nor your employer's applies — unless you choose to make a voluntary contribution yourself.
Do student loan repayments come out of redundancy pay?
Yes. If you have a student loan, 12% is generally deducted from the whole redundancy payment, since your regular pay normally uses up the annual repayment threshold ($24,128).
How much redundancy pay should I be getting?
There's no statutory minimum redundancy compensation in New Zealand — it depends entirely on your employment agreement. A common formula is a set number of weeks' pay per year of service. Estimate yours with our Redundancy Pay Calculator.
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