Working for Families Tax Credits Guide

Working for Families (WFF) is New Zealand’s main in-work financial support package for families with dependent children. It provides weekly or fortnightly tax credit payments to reduce the cost of raising children. For many families, it’s a significant source of income — but the abatement rules and multiple credit types make it complex to understand. This guide breaks it all down for 2025-26.

What Is Working for Families?

Working for Families is a package of tax credits administered by IRD. Unlike a benefit, it’s described as a “tax credit” because it’s calculated against your income tax liability and paid in addition to your wages. If your credit exceeds your tax liability, you receive the excess as a direct payment.

WFF consists of four separate credits:

1. Family Tax Credit (FTC)
2. In-Work Tax Credit (IWTC)
3. Minimum Family Tax Credit (MFTC)
4. Best Start Tax Credit (BSTC)

Each has its own eligibility rules, income thresholds, and abatement rates.

1. Family Tax Credit (FTC)

The Family Tax Credit is the core WFF payment. It’s based on the number of dependent children in your family, each under 18 (or under 19 and in secondary school).

Annual FTC rates (2025-26):

Child	Weekly Amount	Annual Amount
First child under 16	$136.98/week	$7,123
Each subsequent child under 16	$111.09/week	$5,777
First child aged 16–18	$156.31/week	$8,128
Each subsequent child aged 16–18	$136.98/week	$7,123

Who can get it: Families with dependent children who are the primary carer. There is no minimum work requirement for FTC — you can receive it even if you’re not working.

Income abatement: FTC begins abating once family income exceeds $42,700 per year. The abatement rate is 27 cents per dollar of income above this threshold. This means for every $1,000 over $42,700, your FTC reduces by $270.

Example — 2 children under 16, family income $55,000:

Full FTC = $7,123 + $5,777 = $12,900 per year

Income over threshold = $55,000 − $42,700 = $12,300 Abatement = $12,300 × 27% = $3,321

Reduced FTC = $12,900 − $3,321 = $9,579 per year (approx. $184/week)

2. In-Work Tax Credit (IWTC)

The In-Work Tax Credit is an additional payment for families where the adults are in paid employment meeting minimum hours.

Work hour requirements:

• Single parent: minimum 20 hours per week
• Couple: combined minimum 30 hours per week

IWTC rates (2025-26):

• $72.50 per week for families with 1–3 children
• Additional $15 per week for each child beyond three

This means a family with 1 to 3 children can receive an extra $3,770 per year if they meet the work hours requirement.

Income abatement: IWTC abates at the same rate and threshold as FTC — 27 cents per dollar above $42,700.

IWTC cannot be received at the same time as most main benefits (Jobseeker Support, Sole Parent Support, etc.) or student allowances, as it’s specifically for families in paid work.

3. Minimum Family Tax Credit (MFTC)

The Minimum Family Tax Credit is a top-up for working families with very low incomes. It guarantees a minimum annual income level after tax.

For 2025-26, the MFTC ensures that families in work receive a minimum of $35,204 per year after tax (approximately $677 per week).

If your after-tax family income from work falls below this threshold, MFTC tops you up to reach it.

Eligibility:

• You must be a single parent working at least 20 hours per week, or a couple working at least 30 hours combined
• Income must be from paid employment (not benefits or student allowances)
• You must not be receiving IWTC

MFTC is targeted at families working but earning very low wages — for example, part-time workers on the minimum wage.

4. Best Start Tax Credit (BSTC)

Best Start is a payment for families with newborn or very young children, intended to help with the costs of the first few years of a child’s life.

Rate: $3,328 per year ($64 per week) per eligible child.

Eligibility phases:

• Year 1 (birth to 1 year): Available to all families regardless of income
• Year 2 (age 1–2): Available to families not receiving paid parental leave
• Year 3 (age 2–3): Subject to income abatement

In Year 3, BSTC abates at 21 cents per dollar of income above $79,000 per year. Full phase-out occurs at around $95,851.

BSTC is paid weekly or fortnightly to the primary carer. You apply for Best Start through IRD or Work and Income when your baby is born.

Combined WFF Example

Family: couple with 2 children under 16, combined income $62,000, both working 30+ hours

Credit	Annual Amount
FTC (full): $7,123 + $5,777	$12,900
FTC abatement: ($62,000 − $42,700) × 27%	−$5,211
FTC after abatement	$7,689
IWTC (meets hours)	$3,770
IWTC abatement: same $19,300 over threshold × 27%	−$5,211
IWTC after abatement (floor: $0)	$0
Total WFF	~$7,689/year ($148/week)

At $62,000 family income, IWTC has been fully abated by the income threshold. FTC remains partially.

How to Receive Working for Families

You can receive WFF in two ways:

Weekly or fortnightly payments throughout the year: IRD estimates your annual family income and pays you weekly or fortnightly. At year end, the actual income is reconciled — if you were overpaid (because income was higher than estimated), you repay the difference. If underpaid, you receive a top-up.

Lump sum at the end of the year: You receive nothing during the year but claim the full amount as a tax credit when filing your income tax return. This avoids the risk of overpayments but means you don’t get the cash flow benefit during the year.

Most families choose weekly/fortnightly payments for the regular cash flow. If your income fluctuates significantly, you should update your income estimate with IRD to avoid a large year-end repayment.

Shared Care

If children split time between two households, WFF is split between the primary carers. The parent who has the children for more than 50% of nights in a year is considered the primary carer. If care is exactly 50/50, the parents can agree how to split the payment, or IRD will apply a default split.

Summary

• FTC is the main payment — based on number of children, abates above $42,700
• IWTC adds up to $3,770/year for working parents meeting hours requirements
• MFTC guarantees a minimum income floor for low-earning working families
• Best Start pays $64/week for children under 3, available to all in year 1
• Abatement rate: 27 cents per dollar above $42,700 (FTC/IWTC); 21 cents above $79,000 (BSTC)
• Apply through myIR or call IRD; choose weekly payments or year-end lump sum

If you’re estimating your family’s income, use our Take-Home Pay Calculator as a starting point, then check your WFF entitlement on the IRD website or through a tax adviser.