Having a baby — New Zealand tax & benefits guide

Q: How much is Paid Parental Leave in NZ for 2025-26?

Up to $712.17 gross per week for 26 weeks (current 2025-26 rate, indexed each 1 July). Paid to one primary carer, though weeks can be transferred to a spouse. To qualify you must have worked at least 10 hours/week for at least 26 of the last 52 weeks (or 6 of last 12 months if hours varied). Self-employed applicants use their best-case weekly average. PPL is taxable — IRD withholds at your M tax code rate.

Q: What Working for Families credits do new parents get?

Three stacked credits: Family Tax Credit ($152.30/week eldest + $124.10/week each subsequent — 2026-27 rates from 1 April 2026, up from $144.70/$117.90), In-Work Tax Credit ($147.50/week flat for 1-3 kids if you meet the work test — 20 hrs/wk single, 30 hrs combined couple. This is a TEMPORARY Budget 2026 boost from $97.50; reverts to $97.50 from 1 April 2027 or earlier if 91-octane petrol drops below $3/L for 4 consecutive weeks), and Minimum Family Tax Credit (tops after-tax income to a guaranteed floor). FTC + IWTC abate together at 27.5¢ per dollar of family income above $44,900 for the 2026-27 year. For 2025-26 and prior, abatement was 27¢ above $42,700.

Q: What is Best Start and when does it stop?

A separate child payment of $77.70/week per child (2026-27 rate from 1 April 2026, up from $73.80). For babies born before 1 April 2026, year 1 is universal regardless of income. For babies born on or after 1 April 2026 (Budget 2025 RIS), year 1 is income-tested at the same 21¢ per dollar of family income above $79,000 as years 2 and 3 — fully cut off around $99,500. Paid weekly or fortnightly alongside WfF by IRD. Automatic if you register the birth and already receive WfF, otherwise apply via myIR.

Q: Does my employer pay KiwiSaver while I'm on PPL?

Employer 3% contributions are not legally required during government PPL, but many employers pay voluntarily — check your agreement. Your own employee contributions pause automatically when your salary stops. You can still make voluntary contributions of at least $1,042.86 during the 1 July–30 June KiwiSaver year to capture the full $260.72 government Member Tax Credit (halved from $521.43 under Budget 2025) — this is the single biggest missed opportunity during leave.

Six stops every new NZ parent should know — PPL via IR881, the Working for Families FTC + IWTC + MFTC stack, Best Start, the M → ME tax-code transition, KiwiSaver Member Tax Credit during leave, and the IR3 end-of-year wash-up. Each links to the calculator that does the maths.

The six stops

Paid Parental Leave (PPL) → Working for Families (FTC + IWTC + MFTC) → Best Start → Tax code M → ME transition → KiwiSaver during leave + Member Tax Credit → IR3 wash-up + end-of-year refund →

Paid Parental Leave (PPL)

Up to $712.17/week for 26 weeks (2025-26), indexed 1 July. Paid by IRD. Partner can take transferred weeks.

Weekly cap (2025-26)

$712.17 gross

Duration

26 weeks

Work test

≥10 hrs/wk × 26 of 52 wks

Keep-in-touch hours

64 over full period

Self-employed

Best-weekly-average basis

Tax code on payments

M (primary)

Tax note: PPL is taxable income. IRD withholds PAYE at M so your end-of-year position is roughly neutral — but a KiT top-up or employer salary continuance can push you into a higher bracket. Apply via IR881 at least 6 weeks before due date. Can start from birth or up to 6 weeks before.

Parental leave calculator →

Working for Families (FTC + IWTC + MFTC)

Weekly tax credits paid by IRD. FTC $152.30/$124.10 per child, IWTC $147.50 (work-tested, 2026-27 temp boost), MFTC top-up floor.

FTC eldest child (2026-27)

$152.30/week

FTC subsequent (2026-27)

$124.10/week each

IWTC (1-3 kids, 2026-27 TEMP)

$147.50/week flat

Abatement threshold (2026-27)

$44,900 family income

Abatement rate (2026-27)

27.5¢ per $1 over

IWTC work test

20 hrs single / 30 hrs couple

Tax note: FTC + Best Start rates uplifted 1 April 2026 (Budget 2026 CPI step). IWTC base is in a temporary $50/wk boost ($97.50 → $147.50) for 2026-27 only; reverts to $97.50 from 1 April 2027 or earlier if 91-octane petrol drops below $3/L for 4 consecutive weeks. Abatement reduces FTC first, then IWTC. During unpaid leave IWTC pauses (work-test fails), but FTC and MFTC continue. MFTC is the floor that tops after-tax work income for sole earners — excluded if receiving JobSeeker, Sole Parent Support, or Supported Living Payment.

Working for Families calculator →

Best Start

$77.70/week per child (2026-27). Year 1 income-tested for babies born ≥ 1 Apr 2026; otherwise universal year 1. Years 2-3 abate at 21¢/$1 over $79,000 family income.

Weekly rate (2026-27)

$77.70/child

Year 1 (born ≥ 1 Apr 2026)

Income-tested at $79k/21%

Year 1 (born < 1 Apr 2026)

Universal (no income test)

Years 2-3 abatement

$79,000 threshold

Year 2-3 abate rate

21¢ per $1

Full cutoff (years 2-3)

~$97,000 family income

Tax note: Best Start abatement is separate from the main FTC+IWTC abatement — two independent income tests run in parallel. From 1 April 2026 (Budget 2025 RIS), year 1 is also income-tested at the same $79k/21% as years 2-3 for babies born on or after that date — universal year 1 is retained only for babies born before 1 April 2026. Automatically bundled with WfF payments if you already receive WfF, otherwise register via myIR at birth.

WfF calculator (incl. Best Start) →

Tax code M → ME transition

IETC is worth up to $520/year. If your post-leave income lands $24k-$48k and you don't receive WfF, you should be on ME, not M.

IETC maximum

$520/year ($10/wk)

Eligibility band

$24,000 – $48,000

Abates above

$44,000 @ 13¢/$1

Code when IETC-eligible

Code when not eligible

Code for WfF recipients

M (no IETC)

Tax note: IETC is NOT available if you receive Working for Families, NZ Super, a main benefit, or student allowance. Part-year parental leave often means your actual annual income drops into the IETC band — even if you stay on M, IRD will refund the IETC via the auto-assessment in May-July. But telling IRD to switch you to ME means the refund appears in-payroll through the year instead of waiting 9 months.

IETC calculator →

KiwiSaver during leave + Member Tax Credit

Employee contributions pause during unpaid leave. Government match requires $1,042.86 of voluntary contributions by 30 June.

Government match (MTC)

$260.72/year max (post-Budget 2025)

Contributions needed

$1,042.86 ($20.06/wk)

MTC year end

30 June

Employer contributions on PPL

Voluntary (check contract)

Employee default (back at work)

3% / 4% / 6% / 8% / 10%

Savings suspension

Up to 12 months, then renew

Tax note: The $260.72 government Member Tax Credit (halved from $521.43 on 1 July 2025 under Budget 2025) is the single most missed payment during parental leave. Put aside ~$20/week in voluntary contributions to lock it in. If you're tight on cash, lump-sum $1,042.86 by 30 June — the timing matters more than the frequency. Savings suspension stops deductions when you return to work but forfeits employer contributions too.

KiwiSaver MTC calculator →

IR3 wash-up + end-of-year refund

Parental leave years are high-refund years. Check your auto-assessment each May-July for IETC + WfF square-up.

Tax year end

31 March

IRD auto-assessment arrives

May – July

IR3 filing deadline (with agent)

31 March following

Donation rebate (IR526)

33.33% of donations ≥$5

Refund target (typical)

IETC + PPL PAYE overwithhold

Family income re-estimate

Due whenever income shifts >20%

Tax note: When your annual income drops due to leave, PAYE deducted during the high-earning months is often too much — IRD returns the difference at year-end. Your WfF payments are also reconciled — if you over-estimated family income and got less WfF than entitled, IRD tops up; if under-estimated, you owe. Call IRD or update via myIR whenever you return to work at a materially different salary.

IR3 refund estimator →

Claims & milestones timeline

From 20 weeks pregnant

Apply for PPL via IR881

Apply at least 6 weeks before due date (earlier for transfers to partner). IRD needs employer confirmation of hours worked. Self-employed submit recent tax returns + bank statements.
PPL calculator →
Pre-birth

Decide on PPL split with partner

Up to 26 weeks transferable between eligible parents. If partner has higher salary, transferring weeks to the lower earner captures more after-tax value per week (lower PAYE).
Birth

Register birth with Internal Affairs + SmartStart

Registering the birth via SmartStart (smartstart.govt.nz) auto-forwards to IRD for WfF + Best Start setup and to Service NZ for payment setup. One form covers everything.
Within 2 weeks

Apply for IRD number for baby

Needed to open a KiwiSaver account and to receive Best Start under child's name if required. Usually issued automatically when birth registered.
Within 1 month

First PPL payment + confirm tax code M

PPL is paid fortnightly by IRD. Confirm PAYE at M — most employer PPL top-ups (if offered) run through payroll at SH/ST to avoid double-counting primary-source income.
Within 3 months

Open baby's KiwiSaver + nominate contribution

Under-18s can join KiwiSaver but don't receive the MTC until age 18+ with $1,042.86 contributed. Opening early sets up habit + long compounding.
KiwiSaver calculator →
Before 30 June

Make KiwiSaver voluntary contribution for MTC

Target $1,042.86 of member contributions across payroll + voluntary to capture the full $260.72 Member Tax Credit (post-Budget 2025, halved from $521.43). During leave this is 100% voluntary — lump-sum at end of year works.
MTC calculator →
Return to work

Update IRD + switch tax code if appropriate

Drop WfF receipt + annual income $24-48k → switch M to ME to capture IETC in-payroll. Update family income estimate so WfF rate is correct and end-of-year square-up is small.
IETC calculator →
May – July each year

Check IRD auto-assessment

Parental leave years often have $500-$2,000 of refund due between PPL PAYE + IETC + WfF square-up + KiwiSaver MTC. Confirm IRD got everything right before they close the year.
Refund estimator →

Commonly missed opportunities

KiwiSaver MTC during leave — A lump-sum $1,042.86 voluntary contribution by 30 June triggers the full $260.72 government match (25¢-per-$1 rate post-Budget 2025; was 50¢-per-$1 and $521.43 pre-1 July 2025). Many parents skip it because employer contributions pause, not realising the MTC is driven by their own contributions, not salary.
ME tax code on return to work — If family income drops below $48k during your return-to-work year, switching from M to ME captures up to $520/yr IETC in-payroll instead of waiting for the auto-assessment refund.
Transfer PPL weeks to the lower-earning partner — PPL is taxed at M at the individual level. Shifting weeks to the spouse in the lower marginal rate captures more after-tax dollars per weekly cap.
Best Start year 1 is universal — High earners often assume they won't qualify and skip applying. Year 1 has no income test; that's $3,796 left on the table over 52 weeks.
Register your family income estimate with IRD — WfF is paid based on your estimate, and any under-estimate creates a year-end debt. Update immediately when income shifts by more than 20% (e.g., return to full-time, change hours, bonus landed).
Donation rebate (IR526) — School building fund, church donations, charity giving all qualify for a 33.33% rebate on donations over $5. Most parents miss this by not keeping receipts during busy baby years.
Trans-Tasman portability with Australian PPL — If you move to/from Australia during parental leave you may be eligible for portability arrangements. Contact IRD and Services Australia before moving.

Frequently asked questions

How much is Paid Parental Leave in NZ for 2025-26?

Up to $712.17 gross per week for 26 weeks (current 2025-26 rate, indexed each 1 July). Paid to one primary carer, though weeks can be transferred to a spouse. To qualify you must have worked at least 10 hours/week for at least 26 of the last 52 weeks (or 6 of last 12 months if hours varied). Self-employed applicants use their best-case weekly average. PPL is taxable — IRD withholds at your M tax code rate.

What Working for Families credits do new parents get?

Three stacked credits: Family Tax Credit ($152.30/week eldest + $124.10/week each subsequent — 2026-27 rates from 1 April 2026, up from $144.70/$117.90), In-Work Tax Credit ($147.50/week flat for 1-3 kids if you meet the work test — 20 hrs/wk single, 30 hrs combined couple. This is a TEMPORARY Budget 2026 boost from $97.50; reverts to $97.50 from 1 April 2027 or earlier if 91-octane petrol drops below $3/L for 4 consecutive weeks), and Minimum Family Tax Credit (tops after-tax income to a guaranteed floor). FTC + IWTC abate together at 27.5¢ per dollar of family income above $44,900 for the 2026-27 year. For 2025-26 and prior, abatement was 27¢ above $42,700.

What is Best Start and when does it stop?

A separate child payment of $77.70/week per child (2026-27 rate from 1 April 2026, up from $73.80). For babies born before 1 April 2026, year 1 is universal regardless of income. For babies born on or after 1 April 2026 (Budget 2025 RIS), year 1 is income-tested at the same 21¢ per dollar of family income above $79,000 as years 2 and 3 — fully cut off around $99,500. Paid weekly or fortnightly alongside WfF by IRD. Automatic if you register the birth and already receive WfF, otherwise apply via myIR.

What tax code should I use on PPL and when I return to work?

PPL is paid as a primary income source so IRD automatically applies M. If you also earn PAYE wages (e.g., keeping-in-touch hours or a second job), that other income becomes secondary and uses S / SH / ST codes. On return to work, if your annual pay lands between $24,000 and $48,000 and you don't receive WfF/NZ Super/benefits, switch to ME to capture the Independent Earner Tax Credit (up to $520/year).

Does my employer pay KiwiSaver while I'm on PPL?

Employer 3% contributions are not legally required during government PPL, but many employers pay voluntarily — check your agreement. Your own employee contributions pause automatically when your salary stops. You can still make voluntary contributions of at least $1,042.86 during the 1 July–30 June KiwiSaver year to capture the full $260.72 government Member Tax Credit (halved from $521.43 under Budget 2025) — this is the single biggest missed opportunity during leave.

Do I still need to file an IR3 while I'm on parental leave?

Not mandatorily — IRD auto-assesses most PAYE earners at year end. But you should log into myIR between May and July and confirm the assessment, because: (1) if your annual income drops below $48k you may become IETC-eligible for a refund; (2) WfF end-of-year square-up may owe you more (or claw back an overpayment) depending on actual vs estimated family income; (3) KiwiSaver Member Tax Credit requires your contributions to be on file by 30 June.

Sources

Last updated 28 May 2026 (NZ Budget 2026 night). Reflects 2026-27 rates effective 1 April 2026: PPL weekly cap $712.17, WfF FTC $152.30/$124.10 + IWTC $147.50 (TEMPORARY Budget 2026 boost from $97.50; reverts 1 April 2027), Best Start $77.70/wk. Abatement thresholds: WfF $44,900 / 27.5% and $79,000 / 21% for Best Start years 2-3 (and year 1 for babies born ≥ 1 April 2026). For 2025-26 and prior, FTC was $144.70/$117.90, IWTC $97.50, Best Start $73.80, WfF abatement $42,700/27%. See the Budget 2026 summary for the full set of changes. This is general information — consult IRD or a registered tax agent for personal circumstances.