Tax refund or tax bill in NZ: how your year-end tax works

Your tax year runs from 1 April to 31 March, but the tax taken from your pay and your interest is worked out a little at a time, on guesses about the full year. Once the year closes, Inland Revenue (IRD) does the sum properly. If too much came off, you get a refund; if too little, you get a bill, which is written off when it is $50 or less for most people and otherwise due by 7 February of the following year.

What happens after 31 March

Through the year, tax comes off your income at the source. Your employer deducts PAYE each payday. Your bank deducts resident withholding tax (RWT) from interest. A KiwiSaver or other PIE fund deducts tax at your prescribed investor rate. None of these payers can see the rest of your income, so each one makes an estimate.

At the end of the year IRD adds everything up. Your income from all sources becomes your taxable income, the tax on it is worked out using the bands for that year, and credits such as the independent earner tax credit come off. Then the tax already deducted is subtracted. What is left over is the answer:

• More tax deducted than was due: a refund.
• Less tax deducted than was due: tax to pay.
• Close to even: a few cents either way, which is common for someone with one job on the right code all year.

A refund does not mean you did something clever, and a bill does not mean you did something wrong. Both are usually a sign that one of the in-year estimates missed.

Automatic assessment or an IR3 return

How the square-up reaches you depends on what kind of income you had.

Automatic assessment. If all your income was already taxed before it reached you, IRD works out your tax for you and you do not file a return. That covers salary and wages, interest and dividends, PIE income including KiwiSaver, NZ Super, income-tested benefits, schedular payments, Maori authority distributions and employee share scheme benefits. IRD starts issuing these assessments from the last weekend in May and keeps going through June and July, paying refunds as each one is processed. For the 2025/26 tax year that happened between late May and July 2026. For the current 2026/27 year it will start in late May 2027.

IR3 return. If you had more than $200 of income before tax that IRD has not been told about, you file an individual income tax return (IR3) instead. Self-employed profit, rent and overseas income are the usual reasons. The IR3 for the 2026/27 year is due by 7 July 2027, or later if you use a tax agent with an extension of time. Our guide on who files an IR3 covers this in detail.

Even with an automatic assessment, check it. Log in to myIR and make sure every employer, bank and fund is there and the totals match your own records. IRD relies on what payers report, and a missing job or account changes the result.

The usual reasons for a refund

PAYE assumes each payday is a typical slice of a full year. When your year does not look like that, too much tax usually comes off. These are the patterns behind most refunds:

• You only worked part of the year. Starting a first job, coming back from overseas, finishing study or taking months of unpaid leave all mean your actual annual income was lower than each payday suggested.
• You were eligible for the independent earner tax credit but not on code ME. The credit of up to $520 a year (2026/27) then comes back in the assessment.
• Your secondary tax code was too high for your total income, so a second job had tax taken at a higher flat rate than your income reached.
• Your RWT rate on interest was higher than your income tax rate. A person who never chose a rate has RWT taken at 33% by default, which is too high for anyone earning $78,100 or less in 2026/27.
• A bonus or lump sum was taxed at a rate based on a high estimate of your annual pay.

The first is by far the biggest, so it gets the first worked example below.

The usual reasons for a bill

A bill means something took out less than your real income needed. Common causes:

• Interest taxed at too low an RWT rate. Rates are often set once and forgotten. If your income has climbed into a higher band since, the bank keeps deducting at the old rate.
• A secondary tax code that was too low, such as SB on a second job when your total income was well past $15,600.
• Code ME when you were not eligible, for example because your income ended up at $70,000 or more, you or your partner were entitled to Working for Families, or you received NZ Super or a main benefit. The credit paid through your wages is taken back.
• PIE income at too low a prescribed investor rate. IRD squares this up and adds any shortfall to your tax. See PIR explained.
• An extra payday, a 27th fortnightly or 53rd weekly pay in the year.

The second worked example shows the RWT case, which catches a lot of savers whose incomes have grown.

Worked example 1: a part-year job and a refund

Tama finished university in September 2026 and started his first full-time job on 1 October, earning $1,200 a week on code M. He works 26 weeks in the 2026/27 tax year, so his income for the year is $31,200. He has no other income.

Each week his employer treats $1,200 as if it were 52 weeks of pay, an annual rate of $62,400. On that basis the income tax part of his PAYE is $210.39 a week. The tax actually due on $31,200 for the year is much lower, because most of it falls in the 10.5% and 17.5% bands.

Two points worth knowing. First, Tama's payslips also show an ACC earners' levy of $21.00 a week. That levy is not income tax, and it is not refunded through the assessment, so it sits outside the sum above. Second, Tama does nothing to claim this. His income was all wages, so the refund arrives through his automatic assessment from late May 2027.

If he had been eligible for the independent earner tax credit for the months he counts, the credit would have added to the refund. Our refund calculator handles both.

Worked example 2: interest at the wrong RWT rate

Leilani earns $85,000 a year in 2026/27 and has $4,000 of term deposit interest. She set her RWT rate at 17.5% years ago when she earned less, and never changed it. Her total income of $89,000 is in the 33% band, so IRD's guidance says her RWT rate should be 33%.

At the right rate her bank would have deducted $1,320.00. The $620 shortfall is the main part of her bill; the remaining 50 cents is because PAYE, worked out a payday at a time, came to $17,927.00 against exact tax on $85,000 of $17,927.50. Her bill is well over $50, so it is not written off, and she should change her RWT rate with her bank now so the same thing does not happen next year.

Now a smaller version. Ana earns $60,000 and had $300 of interest with RWT at 17.5%, when her correct rate is 30%. Her PAYE came to $10,220.08 and RWT to $52.50, against tax due of $10,310.50. That leaves $37.92 to pay, which is under the $50 limit, so it would normally be written off automatically. Read the next section before relying on that. More on choosing a rate in interest and RWT.

The $50 write-off, and who cannot use it

IRD writes off tax to pay of $50 or less when it issues an automatic assessment. It applies only to a bill; a small refund is still paid. According to IRD's automatic write-offs page (updated 30 September 2026), you cannot use it if:

• you file an IR3 return;
• your income is not confirmed;
• you used a tailored tax code;
• your tax code or tax rate was wrong;
• you were a primary caregiver entitled to Working for Families at any time in the year.

That fourth point matters for Ana in the example above. Her RWT rate was wrong, so the write-off may not apply to her even though her bill is under $50.

A bill of any size can be written off if your income was an income-tested benefit, education grant, NZ Super or veteran's pension, you had no more than $200 of other income, no tailored tax code and no Working for Families entitlement.

There is also a write-off for a bill caused by an extra pay period, if you worked for the same employer for the full 12 months. The latest published limits are for the 2026 tax year (2025/26):

Limits for the 2027 tax year (2026/27) had not been published at the time of writing.

Due dates, interest and getting your refund

Year-end tax is due on 7 February in the calendar year after the tax year ends, or 7 April if you have a tax agent with an extension of time.

If you received a 2025/26 bill this year, the date to put in your calendar is 7 February 2027. IRD does not charge or pay use-of-money interest on amounts of $100 or less.

Refunds go to the bank account IRD holds for you, so check it in myIR. If you owe IRD something else, such as student loan arrears, some or all of a refund can be used to pay that first.

If you had more than $5,000 of residual income tax for the year, which usually means self-employed or rental income, you may also need to pay provisional tax for the following year.

Questions people ask

Do I have to apply for my tax refund?

Not if all your income was already taxed, such as wages, interest and KiwiSaver. IRD issues an automatic assessment from late May and pays the refund to your bank account. You only file if you had more than $200 of untaxed income.

Why is my refund bigger this year?

Usually because your income was lower than your paydays suggested, for example you worked part of the year, or because you were eligible for the independent earner tax credit but on code M.

Is a tax bill of $50 or less always written off?

No. The automatic write-off does not apply if you filed an IR3, your income was not confirmed, you used a tailored code, your tax code or rate was wrong, or you were a primary caregiver entitled to Working for Families.

When is my 2025/26 tax bill due?

By 7 February 2027, or 7 April 2027 if you use a tax agent with an extension of time.

Is the ACC levy refunded at year end?

No. The ACC earners' levy deducted with your PAYE is not income tax and is not refunded through the income tax assessment.