Secondary Tax NZ: Why Your Second Job Feels Taxed to Death

By Jack Ridder · 12 August 2026

Secondary tax is not a penalty and it is not a higher rate of tax. It is a withholding rate applied to your second job so that, added to your first job, you end up paying roughly the right amount of tax overall. If it feels like you are being punished for working more, that is because the rate is calculated on your total income, not on the size of the second pay packet.

Here is what to do right now:

• Add up your expected income from every job for the year.
• Find that total in the table below and note the matching code: SB, S, SH, ST or SA. Add "SL" to it if you have a student loan.
• Give your second employer an IR330 with that code on it. Changes apply from the next pay run.
• If your income is irregular or you think the code is wrong, log in to myIR and check what has actually been deducted.

If your second job pushes you barely over a threshold, or your hours swing week to week, you are probably over-paying and will get it back at the end of the tax year. Read on for why.

Key Takeaways

Secondary tax exists so that two employers who cannot see each other's payroll still manage to withhold roughly the right total. It goes wrong in predictable ways, and all of them are fixable.

Table of Contents

• What are the secondary tax codes for 2026/27?
• Why secondary tax feels so much worse than it is
• Worked example: a $55,000 job plus a $10,000 side job
• Where secondary tax actually goes wrong
• What to do if you have been on the wrong code
• Special tax codes, and when to ask for one
• Secondary tax if you have a student loan
• Working out your real take-home across two jobs
• Sources

What are the secondary tax codes for 2026/27?

Your main job uses M, or M SL if you have a student loan. Every other source of PAYE income needs a secondary code, and which one depends on your total expected income from all sources for the tax year.

Those rates are not extra. They are the same five marginal rates that apply to everybody, listed on IRD's tax rates page. The thresholds have applied for the full year since 1 April 2025 and are unchanged for the year ending 31 March 2027.

SB is the one people miss. If you are a student with two casual jobs and your combined income for the year is under $15,600, your secondary code is SB at 10.5%. Being put on S instead means 17.5% withheld on every dollar of the second job, and waiting until year end to get the difference back.

On top of income tax, the ACC earners' levy of 1.75% applies to both jobs, up to combined earnings of $156,641 for the year to 31 March 2027.

Why secondary tax feels so much worse than it is

Your main employer applies the brackets progressively. The first $15,600 you earn there is taxed at 10.5%, the next slice at 17.5%, and so on. The average across your whole salary is lower than your top rate, which is why your main job feels reasonably taxed.

Your second employer cannot do that. They have no idea what your first job pays, so they cannot know which bracket you are already sitting in. Instead they apply one flat rate to every dollar they pay you: the rate matching the band your total income lands in.

So the second job is taxed at your top marginal rate from the very first dollar, with none of the cheaper lower bands underneath it. Nothing unfair has happened. Those cheaper bands were already used up by your first job. It just feels worse because you see the full marginal rate coming off a small pay packet.

Pro Tip: If someone tells you to turn down extra hours because "it'll all go to secondary tax", they are wrong. You never lose money by earning more in New Zealand. The extra income is taxed at your marginal rate, not at 100%.

Worked example: a $55,000 job plus a $10,000 side job

Total income: $65,000. That falls in the $53,501 to $78,100 band, so the secondary code is SH at 30%.

Tax on the second job: $10,000 × 30% = $3,000

Tax actually owed on that $10,000: the income sits between $55,000 and $65,000, which is entirely inside the 30% band. So $3,000.

In this case secondary tax gets it exactly right, which is the situation it is designed for.

Now change the numbers. Main job $50,000, side job $10,000. Total $60,000, so still SH at 30%, and $3,000 withheld on the side job.

But the real position is different. Of that extra $10,000, the first $3,500 fills the rest of the 17.5% band (which runs to $53,500) and only the remaining $6,500 is taxed at 30%.

• $3,500 × 17.5% = $612.50
• $6,500 × 30% = $1,950
• Actually owed: $2,562.50
• Withheld: $3,000
• Over-paid: $437.50

Those figures are income tax only. The ACC earners' levy of 1.75% comes out on top, on both jobs.

That $437.50 comes back at the end of the tax year. It was never lost. But it sat in IRD's account instead of yours for up to twelve months, which matters a lot more when money is tight.

Where secondary tax actually goes wrong

Four situations account for most of the damage.

You sit just above a threshold. As in the example above. The closer your total is to the bottom of a band, the more the flat rate over-withholds. Being $1,000 over a threshold is the worst case.

Your hours are irregular. Codes are chosen on an estimate of annual income. If you picked ST expecting solid hours and then the shifts dried up, you have been taxed at 33% on income that belonged in a 17.5% band. This is the single most common cause of a large refund for casual and hospitality workers.

You guessed high to be safe. Understandable, and it works, but it is an interest-free loan to the government for up to a year.

You guessed low. The opposite problem and the more painful one, because it ends in a tax bill rather than a refund. If your second job grew or you picked up a third, update the code rather than waiting.

Pro Tip: If your income varies, base your code on a realistic annual figure rather than your best month. Being slightly under means a small bill you can plan for. Being significantly over means you have been short of cash all year for no reason.

What to do if you have been on the wrong code

1. Work out your actual total income for the tax year, from every source.
2. Check the code against the table above. If it is wrong, download an IR330 and give the corrected one to that employer. It applies from the next pay run, not retrospectively.
3. Log in to myIR and look at your income summary. It shows what each employer has reported and what has been deducted.
4. Wait for the end-of-year assessment. For most salary and wage earners IRD now does this automatically after 31 March. If you have overpaid, the refund goes to your bank account without you filing anything.
5. If something looks wrong, or you have income IRD does not see, you may need to file an IR3. Call IRD on 0800 227 774 if you are not sure which applies.

You cannot get a mid-year refund of over-withheld PAYE just by asking. The fix for the rest of the year is the correct code, or a special tax code.

Special tax codes, and when to ask for one

If the standard codes over-withhold no matter what you do, IRD can issue a special tax code (STC). It is a rate calculated for your circumstances rather than one of the five standard bands, and your employer applies it like any other code.

It is worth asking about if:

• You have several jobs and none of the standard codes fits the pattern
• Your income is seasonal, so a code that suits summer is badly wrong in winter
• You have losses or expenses that will reduce your final tax bill
• You are consistently getting a large refund every year

Apply through myIR or on an IR23BS. It is not automatic and it is not instantaneous, but for someone juggling three casual jobs it can be the difference between managing week to week and waiting a year for your own money.

Secondary tax if you have a student loan

Add SL to the code: SB SL, S SL, SH SL, ST SL, SA SL.

Student loan repayments are 12% of income above the repayment threshold, which is $24,128 a year for the year to 31 March 2027. IRD adjusts it most years, so check the current figure on their student loan pages before relying on it.

The catch: on a secondary job, the 12% is generally deducted from the first dollar, because your main job is assumed to have used up the threshold. If your combined income is actually below the threshold, you have had deductions taken that you did not owe.

Students working two casual jobs over summer are the people this hits most often. If your total for the year comes in under the threshold, that money is recoverable. It is worth checking in myIR rather than assuming.

Working out your real take-home across two jobs

The number that matters is not any single rate. It is what lands in your account once PAYE, the ACC earners' levy of 1.75% and any student loan repayment have come out.

Doing that by hand across two jobs is genuinely fiddly, which is why so many people never check and never find out they have been on the wrong code for a year.

KiwiBudget has a tax calculator built for this. Enter your gross pay, your pay frequency and your actual tax code, and it works out PAYE, the ACC earners' levy, student loan repayments and the independent earner tax credit on the current IRD rates, then shows your take-home per pay period. Every secondary code is in there, including SB. It is a calculator you type into, so you can run your main job and your second job separately and see the real combined position.

Pro Tip: Run the numbers before you accept extra hours, not after. Knowing that an extra shift nets you $180 rather than $240 does not make the shift a bad idea. It makes it a decision instead of a surprise.

If your budget is not working even after you have the codes right, that is worth taking seriously rather than absorbing. MoneyTalks is New Zealand's free financial helpline, funded by the Ministry of Social Development. Call, text or chat online. It is free, confidential, and they have seen every version of this.

This article is general information about how secondary tax codes work in New Zealand. It is not personal tax advice. For advice on your own situation, contact IRD or a registered tax professional.

Sources

• Tax rates for individuals | Inland Revenue
• Tax codes for individuals | Inland Revenue
• ACC earners' levy rates | Inland Revenue
• Repaying my student loan when I earn salary or wages | Inland Revenue
• About us | FinCap (MoneyTalks)