Free Bonus & Commission Tax Calculator for New Zealanders
A one-off bonus or commission is taxed using IRD’s extra-pay method, at the marginal rate of the bracket your annualised income (including the bonus) sits in. The estimator uses 2026/27 NZ brackets.
Your bonus
Based on a $80,000 salary and a $5,000 bonus.
About our Bonus & Commission Tax Calculator
Bonuses feel taxed harder than ordinary pay because they are taxed at the marginal rateMarginal rateTax rate applied to your next dollar of income; the rate on the top slice of your earnings.View in glossary →, not the effective rate. Someone earning $80,000 sees an effective rate near 20% on their regular pay, but the next dollar (and any bonus that lands on top) is taxed at 33%. A $5,000 bonus shows up in the bank account as $3,350, not the $4,000 the effective rate would suggest, and the gap is what generates most of the "tax took half" reaction.
The calculator runs IRD’s lump-sum method: annualise the recent pay to a yearly figure, add the bonus, identify the bracket(s) the bonus slice falls in, apply those rates to the bonus alone. The result is the PAYE deducted on the pay run the bonus appears in.
Move the salary slider to see how the same bonus is taxed differently depending on where the salary sits relative to the bracket boundaries. A $5,000 bonus at $48k crosses into the 30% bracket and pays a blend of 17.5% and 30%. The same bonus at $90k pays a flat 33%. The same bonus again at $190k pays a flat 39%.
How to use it
Enter your annual gross salary (the figure on your employment contract, before any bonuses) and the bonus amount you are about to receive.
The result panel returns the PAYE on the bonus, the implied marginal rate of the slice, and the net bonus that lands in your account. ACC and KiwiSaver are not in this view; both apply on top of the PAYE figure.
For very large bonuses that would push annualised income above $180,000, the calculator handles the bracket cross-over correctly, with the slice up to $180,000 at 33% and anything above at 39%.
Why use it
The biggest reason is to set expectations. A negotiated $10,000 bonus or commission rarely lands as $10,000 in the bank account. Knowing in advance whether the net is $6,700 (33% bracket) or $6,100 (39% bracket) lets you plan around the actual cash, not the headline.
The same calculator works for retention bonuses, sign-on bonuses, year-end commissions, and large back-pay adjustments. All four use the lump-sum extra-pay method and are taxed the same way under NZ rules.
For employers and payroll-curious workers, the calculator is also useful for sanity-checking the PAYE figure on the pay run the bonus appears in. If payroll deducts meaningfully different PAYE from what the calculator produces, the most likely cause is a different annualised pay figure being used (e.g., the recent four-week period was unusual) or a salary-sacrifice element in the bonus itself.
The maths behind it
Bonus PAYE = Σ (slicei × bracket ratei) where slices are determined by adding the bonus to annualised income NZ payroll calculates bonus PAYE using the "lump-sum" or "extra-pay" method. Step 1: annualise the most recent four-week pay to estimate yearly income. Step 2: add the bonus to that figure. Step 3: identify which bracket(s) the bonus slice falls into within the new combined total. Step 4: apply the relevant bracket rate(s) to the bonus and deduct that as PAYE. The maths matches the per-bracket approach used in the regular PAYE calculation; only the application is different.
Worked example
Owen, hospitality manager in Queenstown, on $84,000 with an $8,000 year-end performance bonus.
Owen earns $84,000 a year, which already sits past the $78,100 threshold into the 33% bracket. His employer pays out an $8,000 bonus in December.
Adding $8,000 to his $84,000 annualised pay gives a notional total of $92,000. The whole $8,000 bonus sits in the 33% bracket (between $78,101 and $180,000), so all of it is taxed at 33%.
PAYE on the bonus: $8,000 × 0.33 = $2,640. ACC adds another 1.75% on the bonus: $140. Net bonus to Owen’s account: $5,220.
If Owen were on $48,000 instead, the same $8,000 bonus would span two brackets. The first $5,500 (taking him from $48,000 to $53,500) would be taxed at 17.5%; the remaining $2,500 at 30%. Bonus PAYE in that scenario lands at $1,712. The bracket boundary determines the effective rate on a one-off lump sum.
Things to keep in mind
- Lump-sum method differs from regular PAYE. The bonus is not added to a single pay run; it is taxed as if it sat on top of the year’s income, then deducted as a lump sum. This can produce a higher PAYE figure than naive approaches like "tax the bonus at the most recent fortnight’s effective rate".
- ACC still applies. The ACC earner levy of 1.75% (2026/27) applies to bonus payments, up to the $156,641 annual liable-earnings cap. For high earners whose bonus tips total earnings past the cap, only the slice up to $156,641 carries the ACC levy.
- KiwiSaver applies on bonuses too. Your KiwiSaver employee contribution rate applies to bonus pay the same way it applies to ordinary pay. A $8,000 bonus at 3.5% KS pulls $280 out for KiwiSaver before take-home is calculated. The employer match (also 3.5% from 1 April 2026) similarly applies to the bonus.
- Student loan applies if SL-coded. Borrowers on the SL-suffixed code pay 12% of every dollar of bonus above the pro-rated threshold. For a once-off bonus paid in a single pay period, the threshold for that pay period is also pro-rated; large bonuses end up almost entirely above the threshold.
- Effective rate is usually higher than expected. Most workers experience a $1,000 bonus taxed at the marginal rate of the bracket their income peaks in (often 30% or 33%), even when their effective rate on regular pay is much lower. The "tax took half" feeling is partly true once ACC, KiwiSaver, and student loan are layered on the marginal rate.
NZ-specific notes
FAQs
Why does my bonus look so heavily taxed?
Because the bonus is taxed at the marginal rate of the bracket your annualised income (including the bonus) sits in, not at your average effective rate. Someone earning $80,000 has an effective rate around 20%, but their next dollar (and any bonus) is taxed at 33%. The gap between the two is what makes a bonus look more aggressive than ordinary pay.
Does the calculator include ACC and KiwiSaver?
The bonus calculator focuses on PAYE only. ACC at 1.75% and your KiwiSaver employee contribution both apply on top of the PAYE shown here. For an all-in net-bonus figure, subtract another 1.75% (ACC) and your KS rate from the gross.
Is a bonus taxed differently from a pay rise?
Yes, technically. A pay rise applied to ordinary pay runs is taxed via standard PAYE in each pay period. A one-off bonus uses the lump-sum extra-pay method, which produces the same total tax as if the bonus had been spread evenly across a year, but applies it as a single deduction on the pay run the bonus appears in.
What about commission?
Commission is treated the same as a bonus under the extra-pay rules. Each commission payment is added to the most-recent annualised pay, with the relevant bracket rate(s) applied to that slice. Commission-heavy roles often produce wide swings in per-pay PAYE because each commission pulls a different slice into a different bracket.
Can I salary-sacrifice into KiwiSaver to lower my bonus tax?
Salary sacrifice typically applies to ordinary pay rather than one-off bonuses, and the agreement has to be in place before the bonus is earned. Some employers allow lump-sum direction of bonus into KiwiSaver, where the bonus reduces dollar-for-dollar against KiwiSaver contributions. Check your specific employer’s policy.
How does redundancy pay work?
Redundancy lump sums use the same extra-pay method as bonuses, taxed at the marginal rate of the bracket the lump-plus-annualised-income sits in. The redundancy entitlement calculator handles the entitlement side; the tax-on-redundancy calculation works the same way as a bonus.
Does the bonus push me into a higher bracket permanently?
No. A one-off bonus is taxed in the year it is paid and does not change your bracket for subsequent years. Your regular pay runs return to the standard PAYE rate after the bonus pay is processed.
References & sources
- Inland Revenue, "Extra pays and lump sums (PAYE method)". ird.govt.nz
- Inland Revenue, "Tax rates for individuals". ird.govt.nz
- Accident Compensation (Earners’ Levy) Regulations 2025, New Zealand Legislation. legislation.govt.nz
- Inland Revenue, "End of the tax year (auto-assessment)". ird.govt.nz