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Paying off your student loan if you're employed

If you earn salary or wages and have a student loan, use the SL repayment code with your tax code. It's important to use the tax code that's right for you. This lets your employer know how much to deduct for your student loan repayments.

Student loan repayment deductions

How much you repay to your student loan depends on how much you earn, and if it's your main or secondary job.

Deductions aren't made if you:

  • earn below the pay period repayment threshold, or
  • have a repayment deduction exemption.

Use our PAYE / KiwiSaver deductions calculator to check how much your repayment deductions will be.

Student loan repayments for your main job

You repay 12% of every dollar earned over the repayment threshold.

If you're paid... your repayment threshold is...

The repayment thresholds are based on the annual repayment threshold of $19,760.

For example, if you earn $600 a week before tax your repayment will be $26.40 (($600 - $380) x 0.12 = $26.40).

If you earn under the repayment threshold no deductions will be made from your income.

You can only use an M tax code for benefits from Work and Income. If you also work, use a secondary tax code with SL for that job.

Let us know if you're having difficulty with your repayment amount. We may be able to offer some payment options.

Student loan repayments for your secondary job(s)

You repay 12% on all of your income before tax.

For example, if you earn $600 a week before tax your repayment will be $72 ($600 x 0.12 = $72).

Making extra repayments to your student loan

If you want to make extra repayments through your employer, let them know how much extra you want to pay. They'll send us the extra amount along with your standard deductions each month.

Student loan repayment deduction exemption

You can apply for a repayment deduction exemption if you're a New Zealand-based borrower and:

  • are studying full-time (or about to start studying), and
  • will earn under the annual repayment threshold.

You can apply for a repayment deduction exemption through your myIR Secure Online Services account.

Find out more about equivalent full-time study on the StudyLink website.

The exemption starts from the day you apply until the end of the tax year (31 March). As long as you continue your study programme in the next semester, the exemption will cover:

  • breaks between semesters, and
  • the Christmas break.

If you're going to continue to study after 31 March you must apply for a new exemption. Your employer will start making standard deductions when your exemption no longer applies.

Let us know if your situation changes during the year. We may need to change or stop your repayment deduction exemption.

Student loan special deduction rate

You can apply for a special deduction rate to reduce your student loan repayments if you:

  • have more than one job (including an income-tested benefit, student allowance and New Zealand Superannuation)
  • use the SB SL or S SL tax code for your secondary job(s), and
  • earn less than the repayment threshold from your main job.

Special deduction rates start from the day you apply until the end of the "quarter". You must apply for a new rate each quarter. Apply before a quarter starts to make sure you get the rate for the full quarter. For each quarter you'll need to:

  • estimate your total earnings from your main and secondary job(s), and
  • tell us your pay period frequency for each job.

The table below shows the special deduction rate quarters.

Quarter start date Quarter end date
1 April 30 June
1 July 30 September
1 October 31 December
1 January 31 March

Apply for a special deduction rate through your myIR Secure Online Services account.

Let us know if your situation changes during the year - we may need to change or stop your special deduction rate.

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If you haven't paid enough towards your student loan

Sometimes the right repayments aren't deducted from your salary or wages. This can happen in situations where:

  • your employer hasn't deducted the right amount, or
  • you didn't use SL when you should have.

When this happens we call it a significant under-deduction. If this happens we'll get you to repay it through your salary or wage. We'll let you know if this happens and send your employer a student loan extra deduction notice.

Student loan extra deductions can be made at a rate of up to 41.67% of your standard deduction amount. For example, if your standard deduction is $72 your extra deduction could be $30 ($72 x 0.4167 = $30).

Extra student loan deductions continue until the significant under-deduction amount is paid in full. The extra deductions are in addition to the standard repayment obligations you have.

Use our PAYE / KiwiSaver deductions calculator to check if you've had enough deducted from your income.

If you think your deductions are wrong check with your employer first as you may be using the wrong tax code. If you need to change your tax code give your employer a new Tax code declaration (IR330) with the right tax code including SL.

If you've paid too much towards your student loan

If you've paid too much we call this a significant over-deduction. The threshold for significant over-deductions is $60 per month.

If you find that your deductions are more than you needed to pay, talk to your employer (they'll need to correct any future deductions) and contact us.

If we confirm the amount is significant and you have no unpaid amounts owing, you may be able to:

  • have this refunded
  • leave it on your loan account, or
  • pay another student loan obligation you have with us.

You'll need to contact us within six months of receiving our confirmation if you want to do this.

Use our PAYE / KiwiSaver deductions calculator to check if you've had too much deducted from your income.

Use the right tax code so your employer deducts the correct amount

This means you'll meet the repayment obligations for your income, unless there's been significant:

  • over-deductions, or
  • under-deductions.

Do you want a tax code for...

Are you a NZ tax resident?

You're a New Zealand tax resident in any of these situations:

  • you're in New Zealand for more than 183 days in any 12-month period
  • you have a "permanent place of abode" in New Zealand
  • you're away from New Zealand in the service of the New Zealand government.

Do you have a student loan?

Are you or partner entitled to WfFTC?

Working for Families Tax Credits (WfFTC) is financial help for families who have dependent children aged 18 or under.

What type of income are you earning?

Income-tested benefits include:

  • Emergency benefits
  • Jobseeker support
  • Sole parent support
  • Supported living payment
  • Young parent payment
  • Youth payment.

Is your annual income between $24K - $48K?

Veteran's Pension is a fortnightly payment for veterans who have served in a war or other emergency, and have a disability.

Note: if you receive either, Weekly Income Compensation (WIC) or Weekly Compensation (WC) paid by Veterans? Affairs New Zealand, these payments are deemed as salary or wages.

If you are a contractor in certain types of work, tax will be deducted from your earnings at a flat rate unless you have a certificate of exemption or 0% special tax rate . Find out about the activities and their tax rates. Read the Self-employed or an employee? IR336 guide.

Casual agricultural workers are engaged in casual seasonal agricultural work on a day-to-day basis for up to three months. Casual agricultural workers include shearers and shed hands.

Election day workers are people employed on a casual basis immediately before, on, or after polling day.

You're a recognised seasonal worker if you have an RSE limited visa and plant, maintain, harvest, or pack crops.

You're a foreign fishing worker if you hold a work visa as foreign crew of a vessel fishing New Zealand waters.

A special tax code is a tax rate worked out to suit your individual circumstances.

Do you have a student loan?

Is your total income from all sources ...