NZ student loan repayment threshold — $24,128 for 2026

The annual income threshold for student loan repayments in the 2026 tax year, how the 12% rate applies above it, how overseas-based borrowers differ from NZ-based, and which tax codes trigger automatic deduction. Sourced from IRD.

The threshold and the 12% rate

For the 2026 tax year (1 April 2025 – 31 March 2026) the repayment threshold is $24,128 per year, equivalent to about $464 per week, $928 per fortnight or $2,010.67 per month. Every dollar of salary or wage income above the threshold attracts a 12% repayment deduction, taken via PAYE alongside income tax. Source: IRD — student loans.

Other income types (self-employment, rental, interest, dividends) are handled at year-end through the IR3 income-tax return. If your other income exceeds $1,500 per year, you may also be required to make in-year student-loan instalments.

SL tax codes that trigger automatic deduction

• M SL — main job, with student loan deductions on income above the pay-period threshold.
• ME SL — main job, also eligible for the independent earner tax credit (now repealed effective 1 April 2025 for new entrants; transitional rules apply).
• S SL / SH SL / ST SL — secondary jobs, with 12% deducted on every dollar (no threshold on secondary income).
• SB SL — secondary income where combined annual income is under $15,600.

If you do not give your employer a tax code, the no-notification rate of 46.5% applies on income tax — student loan deductions are still taken if you have a loan.

NZ-based vs overseas-based borrowers

NZ-based borrowers — present in NZ for at least 183 days in a 365-day window — pay 12% above the threshold and the loan is interest-free. There is no fixed annual amount; your obligation rises and falls with your income.

Overseas-based borrowers — outside NZ for 184 consecutive days or more — face a different regime:

• Repayments are no longer income-based. Instead, a fixed annual amount applies based on your loan-balance band — typically $1,000 to $5,000 per year, payable in two instalments (30 September and 31 March).
• Interest resumes on overseas-based loans. The rate is published annually by IRD.
• Repayments are paid directly to IRD via myIR or international payment, not via NZ PAYE.

You re-qualify as NZ-based after 183 days back in NZ — at which point interest stops and the income-based regime resumes.

End-of-year reconciliation

PAYE deductions are based on pay-period income; some borrowers over-deduct or under-deduct across a year. End-of-year reconciliation runs automatically through IRD’s auto-assessment for salary/wage earners — if you over-paid you receive a refund; if you under-paid (e.g. multiple jobs without a special tax code) IRD raises an end-of-year balance.

Related on TaxAccountants.co.nz

• Student loan repayment calculator — plug in your salary, see your monthly deduction.
• NZ income tax rates 2026 — what your M SL deduction is alongside.
• Provisional tax 2026 — if your non-PAYE income triggers in-year instalments.
• GST registration threshold — if your side income is approaching $60k.