Withholding tax rate calculator: what rate to put on your IR330C
Divide the income tax your year's contracting profit carries by your payments before GST, and round up to one decimal place: at least 10%, or 15% on a temporary visa. On $60,000 of labour-only building work with $8,000 of expenses, that is 13.4%, where the standard 20% would take about $3,960 more over the year.
Worked out for the example. Change the boxes to make it yours.
The standard 20% would take about $3,960 more than this rate over the year, money that only comes back after your return.
| Profit for the year ($60,000 less $8,000 expenses) | $52,000 |
|---|---|
| Income tax on the profit, 2026/27 rates | $8,008 |
| Exact rate to cover it ($8,008 over $60,000) | 13.35% |
| Rate to put on your IR330C | 13.4% |
| Deducted in the year at 13.4% | $8,040: $32 back after your return |
| The standard 20% for labour-only building work | $12,000: $3,992 back after your return |
| With no IR330C, the no-notification 45% | $27,000: $18,992 back after your return |
| Put aside yourself: ACC earners' levy, about | $910 |
- Rounded up to one decimal place, as the IR330C asks, so the rate covers a little more than the tax rather than less.
- Schedular tax counts toward your income tax only. ACC invoices its levies to you directly, so put the levy aside as well. The earners' levy shown is about 1.75% of your profit; ACC's invoice also has a Work levy, set by your kind of work, which is not shown here.
- Income tax is worked out at the 2026/27 rates without tax credits. If your income or expenses change during the year, give your client a new IR330C with a new rate.
Free on every plan. Your account adds this client to Your Timesheets as contract work, after asking. Tax to set aside on every invoice, with the schedular rate from your IR330C, is on the Career and Timesheets plan or On the Move.
The four ways to set your rate
If you are paid schedular payments, the person paying you deducts tax before you get the money, at the rate on the Tax rate notification for contractors (IR330C) you give them. Your tax code is always WT. You can use the standard rate for your kind of work from the table on the form, choose your own rate of at least 10% (at least 15% if you are a non-resident or on a temporary entry class visa), ask Inland Revenue for a tailored tax rate, or in some cases apply for a certificate of exemption. With no IR330C at all, your payer must deduct 45%. The deduction is worked out on the payment before GST. Our guide to contractor tax covers the form and the rest of your tax.
How the calculator picks the rate
Tax is charged on your profit for the year, so the calculator takes your payments less your business expenses and works out the income tax on that profit at the 2026/27 rates. If you also have a job, your wages are taxed through PAYE already, but they decide which tax bracket your contracting income lands in, so the tax is worked out on top of them. The rate is that tax divided by your payments, rounded up to one decimal place because the IR330C asks for the rate to one decimal point. In the example, $52,000 of profit carries $8,008 of income tax, which is 13.35% of $60,000, so 13.4%.
Why the standard rate is often wrong
The standard rates take no account of your expenses or your other income. With high costs, such as tools and a vehicle, the standard rate takes more than you owe, and the extra comes back only after your tax return. With a salary as well, it can take too little, and the gap arrives as a bill. If you had more than $5,000 of tax to pay at the end of a year, you pay provisional tax the next year in instalments, so a rate that covers your tax keeps that bill small. Where even 10% is too much, a tailored tax rate from Inland Revenue can be lower.
What schedular tax does not cover
The tax deducted counts toward your income tax only. ACC invoices its levies to contractors directly, usually after your tax return: the earners' levy the calculator shows, and a Work levy set by your kind of work, and a student loan on contracting income is repaid by you, at 12% of income over $24,128. Put both aside from each payment. You need a separate IR330C for each source of contracting income, and you give your client a new one if your income or expenses change. Our article on side hustle tax covers your first tax return.
Questions
What tax rate should I choose on my IR330C?
The rate that matches your income tax: the tax on your year's profit divided by your payments before GST, rounded up to one decimal place. It must be at least 10%, or 15% if you are a non-resident or on a temporary entry class visa.
Is the standard schedular tax rate the right one for me?
Only by chance. It takes no account of your expenses or any other income, so it can take too much, refunded after your return, or too little, which leaves a bill.
What happens if I don't give my client an IR330C?
Your client must deduct tax at the no-notification rate of 45%, or 20% for a non-resident contractor company. The extra comes back only after you file your tax return.
Does withholding tax cover ACC and my student loan?
No. Schedular tax counts toward income tax only. ACC invoices its levies to you directly, and you repay your student loan on contracting income yourself, so put both aside.
Can I choose a rate with a decimal, like 13.4%?
Yes. The IR330C asks for your tax rate to one decimal point.
What happens when I save this?
Your account adds the client to Your Timesheets as contract work, after asking. The rate is not saved: it goes on the IR330C you give your client. Tax to set aside on every invoice is on the Career and Timesheets plan or On the Move.
Sources
- Accident Compensation (Earners' Levy) Regulations 2025.
- business.govt.nz: ACC levies.
- Income Tax Act 2007, s RD 10.
- Inland Revenue: ACC earners' levy rates.
- Inland Revenue: provisional tax.
- Inland Revenue: repaying my student loan when I am self-employed or earn other income.
- Inland Revenue: Tax rate notification for contractors (IR330C, January 2024).
- Inland Revenue: tax rates for individuals.
- Inland Revenue: work out and declare my tax rate for schedular payments.
More free tools: see all the calculators.