The Independent Earner Tax Credit (IETC) provides tax relief to eligible New Zealanders earning between $24,000 and $70,000 per year. As with any tax credit, understanding the specifics of eligibility and how to claim it is crucial. Here’s an in-depth look at the IETC and the recent changes every taxpayer should be aware of.
What is the Independent Earner Tax Credit?
The Independent Earner Tax Credit (IETC) is a tax credit for individuals earning between $24,000 and $70,000 per year and who are not claiming a Working for Families Tax Credit or a benefit. If you’re eligible for the IETC you can get a tax credit of up to $520 for the tax year. So if you’ve paid more than this in tax, you can likely receive a tax refund.
Who is Eligible to Claim the Credit?
You can get the IETC if you meet the following conditions:
- You’re a tax resident of NZ and your total income is between $24,000 and $70,000 (after expenses if you’re self-employed). You can get the IETC on income from:
- salary or wages
- Student Allowance
- Veterans’ compensation payments
- ACC compensation payments
- paid parental leave
- investments
- self-employment
- business that is run through a trust
- other types of business income.
- You or your partner:
- Are not entitled to the Working for Families Tax Credit, and
- Don’t receive an overseas equivalent of the Working for Families Tax Credit
- You are not receiving:
- An income-tested benefit
- NZ superannuation
- Veteran’s pension
- An overseas equivalent of any of the above.
Use the IRD’s IETC tool to check if you’re eligible.
How Much Can You Get?
You can get up to $520 for the tax year. If your income (before tax) in the tax year is between:
- $24,000 and $66,000 – you get $10 per week
- $66,001 and $70,000 – you still get $10 per week, but your entitlement reduces by 13 cents for every dollar you earn over $66,000.
The IETC is worked out on whole months. So if you receive any benefits or pension at any time during a month, you will not be able to claim the IETC for that whole month. Also your before-tax income should not be reduced by any losses you may have brought forward from previous years.
Independent Earner Tax Credit Calculator
Enter your total income for the financial year, before tax and after expenses.
2025 – 2026 Tax Year
2024 – 2025 Tax Year
This calculator includes the threshold changes from 31 July 2024 and the transitional calculation.
Changes from 31 July 2024
On 31 July 2024 the upper threshold for receiving the IETC increased from $48,000 to $70,000. The threshold at which the credit starts reducing (at 13 cent in the dollar) also increased from $44,000 to $66,000. This means that more people, with higher income, are now eligible for the tax credit.
The starting threshold of $24,000 remained unchanged and the maximum credit that can be received remained at $520.
Because the change took effect during the 2024-25 tax year, there is a transitional calculation (which is automatically applied when you file your tax return). The new threshold for those earning between $48,000 and $70,000 will apply in full from the 2025-26 tax year onward.
How to Get the Independent Earner Tax Credit
The way you get the IETC depends on where your income comes from.
- Earning Salary or Wages: Your IETC will either be automatically calculated at the end of the tax year and available as part of your tax refund. Or, to have the IETC taken out of your pay, fill in the tax code declaration (IR330). Choose tax code ME or, if you have a student loan, ME SL for your main job. Give the IR330 to your employer before your next payday.
- Earning Self-employed income: You can claim the IETC at the end of the tax year when you file your individual tax return (IR3). All you need to do is enter the number of months in the year you were eligible for the IETC in your tax return.
Note: The ‘IETC eligible’ step will appear when filing your income tax return if you are eligible.
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