Working While Receiving NZ Super: Tax Codes, IR3 Reconciliation, Worked Examples 2026-27

NZ Super is paid regardless of whether you’re working — it’s not income-tested. But the tax-code interaction with paid work is where many recipients trip up. Pick the wrong codes and you’ll either over-pay PAYE during the year (and wait for an IR3 refund) or under-pay and owe a residual at year-end. This guide covers the right combination for your situation.

The two-income setup

If you receive NZ Super alongside salary, wages, contractor income, or self-employment income, you have two income streams. IRD assigns tax codes to each:

• Primary code (M, M SL): applied to your “main” income. Uses progressive PAYE brackets. Same as if it were your only income.
• Secondary codes (S, S SL, SH, SH SL, ST, ST SL, SA, SA SL): applied to additional income. Flat-rate, picked based on your total annual income.

The “M code goes on your main income” convention is just that — a convention to minimise the year-end reconciliation. There’s no rule that Super must be primary or secondary. Most people make the higher-paying income primary.

Picking the right secondary code

Secondary codes apply a flat percentage to the entire secondary income amount. Pick from this table based on your total annual income (Super + salary + other taxable income combined):

Total annual income	Secondary code	Flat rate
$14,000 or less	S	10.5%
$14,001 – $48,000	SH	17.5%
$48,001 – $70,000	ST	30%
Over $70,000 (but ≤ $180,000)	ST	30%
Over $180,000	SA	39%

Note: ST covers both the $48,001–$70,000 and $70,001–$180,000 IRD-defined bands. There’s no separate code for $70k–$180k. SA only kicks in above $180k.

Add ” SL” to any code if you have a student loan — it adds 12% repayment above the SL threshold ($24,128 in 2026-27).

The thresholds are deliberately wider than the progressive PAYE bracket boundaries — they’re designed to give a flat rate that approximates the recipient’s marginal PAYE rate. That approximation is the source of most year-end reconciliation differences.

Why secondary codes don’t always match marginal rates

Imagine your total income is $60,000: $28,867 NZ Super + $31,133 salary. Your true marginal rate at $60,000 is 30% (the third bracket starts at $53,500). But the secondary code SH applies 17.5% to the secondary income — because IRD assumes both incomes together fit “average”.

If salary is primary (M) and Super is secondary (SH at 17.5%):

• M code on salary $31,133 → progressive PAYE $4,058
• SH on Super $28,867 → 17.5% flat = $5,052
• Total at-source PAYE: $9,110

But if you ran the combined $60,000 through M progressive:

• $0–$15,600 @ 10.5% = $1,638
• $15,600–$53,500 @ 17.5% = $6,633
• $53,500–$60,000 @ 30% = $1,950
• Total = $10,221

So at-source PAYE is $1,111 lower than reconciled M-progressive PAYE. At IR3 time, you owe $1,111.

The same imbalance can go the other way. Higher-income earners can find that secondary codes apply a flat rate that’s higher than their true marginal blend, leaving them with a refund.

Four worked examples (2026-27 rates)

Example 1 — Single living alone, $40k salary + $28,867 NZ Super = $68,867 total.

• Primary on salary (M, $40k): PAYE $5,438
• Secondary on Super (ST at 30% for total $68,867): $8,660
• At-source total: $14,098
• M-progressive on $68,867: $11,213
• Year-end refund: $2,885. ST overshoots because the average effective rate at $68k is lower than 30% on the secondary slice.

Example 2 — Couple both qualify, each earning $20k part-time + $28,867 Super = $48,867 each.

• Primary on salary (M, $20k): PAYE $2,408
• Secondary on Super (SH at 17.5% for total $48,867): $5,052
• At-source: $7,460
• M-progressive on $48,867: $7,420
• Year-end roughly neutral (≈$40 either way) — SH at 17.5% closely matches the M-progressive average for total in the SH band.

Example 3 — Working full-time at $80k + $28,867 Super = $108,867 total (single living alone).

• Primary on salary (M, $80k): PAYE $17,302
• Secondary on Super (ST at 30% for total $108,867): $8,660
• At-source: $25,962
• M-progressive on $108,867: $24,469
• Year-end refund: $1,493.

Example 4 — High earner $150k + $28,867 Super = $178,867 total (single living alone).

• Primary on salary (M, $150k): PAYE $40,162
• Secondary on Super (ST at 30% for total $178,867): $8,660
• At-source: $48,822
• M-progressive on $178,867: $47,538
• Year-end refund: $1,284.

For this last example, switching Super to SA (39%) instead of ST (30%) would over-correct — you’d get a bigger refund but lose more cash flow during the year. ST is the right secondary at this income level.

What does the IR3 do?

IRD automatically issues an income tax assessment at year-end (the IR3 process). It:

1. Sums all your income (Super, salary, interest, dividends, etc.)
2. Computes the correct progressive PAYE on the total at M-equivalent rates
3. Compares to total at-source PAYE deducted across the year
4. Issues a refund (if over-deducted) or assessment (if under-deducted)

If you have only Super + a single PAYE-deducted salary, you don’t usually need to file IR3 yourself — the auto-assessment catches it. If you have additional income (rental, contractor, dividends not at the highest RWT rate), you do need to file IR3 (typically due 7 July, or 31 March via tax agent).

Avoiding surprise tax bills

Three approaches:

1. Accept the wash. If at-source PAYE is close to reconciled PAYE, the IR3 difference is small. Don’t optimise — just budget for a small refund or top-up.
2. Move Super to higher secondary code. If you consistently owe at year-end with Super on ST, switch to SA. You’ll over-deduct slightly but avoid the bill. You can change your tax code at any time via Work and Income.
3. Use the calculator. The NZ Super calculator has a “with other income” mode that shows you the at-source vs reconciled PAYE for your exact numbers, so you can pick the secondary code that minimises year-end surprises.

Special cases

Self-employed income alongside Super. Self-employed income isn’t PAYE-deducted; you pay provisional tax on it. NZ Super continues with whichever PAYE code you’ve nominated (M or secondary). The IR3 reconciles all income types at year-end.

Casual or relief work. A casual code (CAE) can be applied for short-term casual employment if it’s below 6 months and won’t recur. Most working-while-receiving-Super recipients with regular part-time work are better off using M / S / SH / ST / SA than the casual codes.

Switching Super on/off. You can apply for and stop Super at any time. Some retirees stop Super temporarily during a high-income year to avoid the residual tax bill. This is rare and rarely worth the friction; the IR3 reconciliation handles it more cleanly.

Frequently asked questions

Can I change my tax code mid-year? Yes — apply via Work and Income to change your Super tax code, or fill in an IR330 form for your employer. Changes apply going forward, not retroactively.

What happens if I get the secondary code wrong? Nothing immediate — PAYE just gets deducted at the wrong rate. The IR3 reconciliation at year-end fixes it. The downside of a code that’s too low is a residual tax bill; too high means you waited 12+ months for a refund.

Should NZ Super be primary or secondary? Convention: whichever income is bigger is primary (M). For most working-and-Super recipients earning a normal salary, salary is bigger and primary. If you only work a few hours, Super may be the bigger income — make it primary.

Are SL deductions made on NZ Super? Not at source. NZ Super doesn’t deduct student loan repayments via PAYE. Recipients with a loan reconcile via IR3 — IRD calculates the SL repayment on combined income at year-end.

Why is there no IETC for NZ Super recipients? The Independent Earner Tax Credit closes at age 65. NZ Super recipients are 65+ by definition, so IETC never applies to them.

For a quick check of your exact at-source PAYE on Super at any code, plus the IR3 reconciliation prediction, run your numbers through the NZ Super calculator — the “with other income” mode shows the full picture including which secondary code minimises year-end balance owing.