Contractor tax and GST set-aside calculator
For New Zealand contractors, tradies and freelancers. Find out what percentage of every invoice to move aside the day it lands, and what is genuinely yours to spend.
What you invoice in a year, not counting any GST you add on top.
Tools, vehicle, materials, insurance, phone, accounting fees.
of the total amount your client pays you.
Your year, banked and split
This invoice, split on the day it is paid
Based on the invoice amount above.
Rates used, and where they came from
- Income tax rates: the IRD individual rates that apply from 1 April 2025, which are the rates for the 2026 to 2027 tax year. 10.5% to $15,600, 17.5% to $53,500, 30% to $78,100, 33% to $180,000, then 39%. Source: ird.govt.nz tax rates for individuals.
- GST rate: 15%. Source: ird.govt.nz what GST is.
- GST registration threshold: $60,000 of turnover in the last 12 months or expected in the next 12 months. Source: ird.govt.nz registering for GST.
- Provisional tax trigger: residual income tax of more than $5,000. Source: ird.govt.nz provisional tax.
- ACC earners' levy: $1.75 per $100 of liable earnings, including GST, on earnings up to $156,641, for the year from 1 April 2026 to 31 March 2027. That caps the levy at $2,741.22. Source: Inland Revenue, ACC earners' levy rates, checked 14 September 2026.
- ACC work levy and Working Safer levy: not included. The work levy depends on your classification unit and varies by the type of work you do, so a single rate would be misleading. ACC invoices these separately. Get your own rate from ACC and add it on top.
Rates verified against the IRD pages linked above on 14 September 2026.
Please read this before you rely on the number
This is an estimate for planning only. It is not tax advice and it is not a tax return. It includes the ACC earners' levy but not the ACC work levy, and it ignores student loan repayments, KiwiSaver, losses carried forward, any tax already withheld from schedular payments, and anything else specific to your situation. Confirm your own position with IRD or your accountant before you act on it.
Want the set-aside to happen without you thinking about it?
PayDay can move your tax percentage into a separate account the day an invoice is paid, so the money is gone before you get used to seeing it.
Join the PayDay waitlistHow contractor tax actually works in New Zealand
When you are on a salary, tax is taken out before the money reaches you. When you contract, it is not. A client pays you a lump sum, all of it lands in your account, and some unknown part of it already belongs to Inland Revenue. The job of this calculator is to turn that unknown part into one number you can act on.
The three things coming out of your invoices
- Income tax on your profit, which is your income after deductible business expenses. New Zealand rates are progressive, so the first dollars are taxed at 10.5% and only the dollars above each threshold are taxed at the higher rate.
- GST, if you are registered. The 15% you add to your invoices was never yours. You pass it on to IRD, less the GST you paid on business expenses.
- The ACC work levy and Working Safer levy, which are real and which this page does not calculate. They depend on your classification unit, so get your own rate from ACC and add it to the percentage above. The earners' levy is already included.
Why contractors get caught out
The failure mode is almost never that people cannot do the maths. It is that the money is spent before the bill arrives, because it sat in the everyday account alongside the rent money and the groceries money and stopped looking like tax. By the time the terminal tax date comes round, the account balance is a month of living expenses and the bill is a quarter of the year's income.
The fix is boring and it works. Move the tax percentage out on the day the invoice is paid, into an account you do not spend from. PayDay can do that move for you automatically when an invoice payment lands, so the decision is made once rather than every time.
Provisional tax, and the year that hurts
IRD requires provisional tax once your residual income tax is more than $5,000. The rough year is the one where you pay last year's terminal tax and this year's provisional instalments at the same time. A set-aside habit built from your first invoice is what makes that year survivable.
Living on income that moves around
Setting tax aside is only half of it. The other half is paying yourself a steady amount from an uneven income. We wrote about that in how to budget on a variable income in New Zealand, and about the tools that help in the best money apps for freelancers in NZ. If you want to see how PayDay is built for this specifically, have a look at PayDay for contractors and freelancers, or join the waitlist.
How PayDay connects to your bank
PayDay connects through Akahu, New Zealand's open finance platform. You choose which accounts to connect, and you can disconnect them.
Frequently asked questions
When do I have to start paying provisional tax?
IRD says you have to pay provisional tax if your residual income tax at the end of the year was more than $5,000. It is payable the following year, so if your 2026 return leaves you with more than $5,000 of tax to pay, you pay provisional tax during the 2027 tax year. That is the point where the tax bill stops being one annual lump and turns into instalments you have to plan for. Source: ird.govt.nz provisional tax.
What is the GST registration threshold in New Zealand?
You must register for GST if your turnover from a taxable activity was at least $60,000 in the last 12 months, or you expect it to be at least $60,000 in the next 12 months. You also have to register if you add GST to your prices, whatever your turnover. Below $60,000 you can register voluntarily. Source: ird.govt.nz registering for GST.
Should I keep tax money in a separate bank account?
Yes, and it is the single change that fixes most contractor tax stress. Money sitting in your everyday account gets spent, because it looks like your money. A separate account, ideally one you do not carry a card for, turns the tax percentage into something you never see as spendable. Some contractors go further and use two, one for income tax and one for GST, because the two bills fall on different dates.
Does this calculator include ACC levies?
It includes the ACC earners' levy, charged at a flat $1.75 per $100 of liable earnings for the year from 1 April 2026, on earnings up to $156,641, so the most it can be is $2,741.22. Those rates are published by Inland Revenue and the rate includes GST. It does not include the ACC work levy or the Working Safer levy, because the work levy depends on your classification unit and varies a lot by the type of work you do. ACC invoices those separately, so add them on top.
What if my income is lumpy and I do not know my annual total?
Use a conservative estimate of your annual income rather than an optimistic one. If you set aside a percentage based on a higher income figure than you end up earning, you will have set aside too much, which is a much better problem than the alternative. Review the figure every few months as the year takes shape, and adjust the percentage you are moving across.