NZ Final Pay Calculator

Final pay usually has two different tax treatments in the same payment. Outstanding ordinary wages — hours or days you already worked — are taxed as normal PAYE, the same as any other payday. Unused holiday pay, cashed-up leave and any other lump sum (like a redundancy or retiring allowance) are "extra pay" and taxed at a single flat rate under Income Tax Act 2007 s RD 17, not split across the ordinary brackets.

IRD treats a lump-sum leave payout the same way it treats a bonus: it grosses up your recent pay into an annualised income figure, adds the leave payout on top, finds which tax bracket that combined total falls into, and applies that one rate to the whole leave payment. Inland Revenue's guidance on taxing holiday pay confirms lump-sum holiday pay — including pay in advance, cashed-up leave, and termination payments — is 'usually taxed as a lump sum payment'.

Since 1 April 2025, IRD's end-of-employment method adds up your gross pay from your last 2 ordinary pay periods (excluding the lump sum itself), then multiplies it by an annualisation factor for your pay frequency — 26 for weekly, 13 for fortnightly, 6.5 for four-weekly, or 6 for monthly. The lump sum is added to that annualised figure, and the tax bracket the combined total falls into sets the flat rate applied to the entire lump sum.

Outstanding wages and your holiday pay payout are ordinary earnings, so the 1.75% ACC earner's levy and your KiwiSaver contribution rate both apply to them. ACC stops at the earners' levy maximum: for outstanding wages that is a per-pay limit ($6,024 a fortnight, $13,053 a month), and for the holiday pay payout it is whatever room is left under the $156,641 annual maximum. Redundancy payments and retiring allowances are both excluded from the ACC earner's levy (Accident Compensation Act 2001 s 11(1)(e) and (f)), but the two differ for KiwiSaver: only a redundancy payment is carved out of the KiwiSaver Act's definition of "salary or wages" (s 4(b)(ii)). A retiring allowance is an extra pay that the same definition includes, so your KiwiSaver deduction still comes off it.

Yes, on the parts that count as salary or wages — your employer's compulsory contribution still applies to outstanding wages and your holiday pay payout, on top of your gross pay (it isn't deducted from what you receive). Employer KiwiSaver contributions are subject to employer superannuation contribution tax (ESCT), deducted from the employer's contribution before it reaches your account, at a rate that rises with your income. A redundancy payment doesn't attract an employer KiwiSaver contribution at all, but a retiring allowance does — it counts as salary or wages under the KiwiSaver Act.

Yes. Your employer adds up the whole final pay — outstanding wages, holiday pay, and any redundancy or other lump sum — subtracts the pay-period repayment threshold for your pay frequency ($464.00 weekly, $928.00 fortnightly or $2,010.66 monthly for 2026-27, the $24,128 annual threshold split across pay periods) and deducts 12% of the balance. It is a per-pay-period test, not an annual one, so a large final pay attracts a deduction even if your income for the year stays under $24,128.

Yes, and it's common. Because the extra-pay method applies one flat rate to the whole lump sum rather than spreading it across brackets, you can be over-withheld if the payout pushes you into a higher bracket than you'll actually sit in for the year, or under-withheld if your income drops after you leave. Either way, it evens out through your end-of-year IRD tax assessment or a return you file.

Employment New Zealand's guidance is that final pay is normally paid in the pay period in which employment ends, or as otherwise agreed in your employment agreement. It should include any outstanding wages, unused holiday pay, and any other agreed payments such as notice pay or redundancy.