Tax & Income guide · New Zealand
Student Loan Deductions from Pay — NZ Guide
Follow a New Zealand student-loan deduction from tax code to payslip, including main and secondary jobs, bonuses, exemptions and deductions that look too high.
Reviewed 26 August 2026
Reviewed by KiwiTools editorial team — NZ calculator researchers; tax settings checked against Inland Revenue
General information only, not tax, financial, employment or legal advice. Check your tax code and current Inland Revenue guidance for your circumstances.
Key points
What payroll needs to know
Add SL to the correct tax code so the employer knows student-loan deductions apply.
Main employment normally uses the pay-period threshold; secondary employment generally deducts 12% from every complete dollar.
An exemption or special deduction rate needs Inland Revenue approval—payroll cannot create one because the ordinary result feels too high.
Main-job and second-job student-loan deductions
For the 2027 tax year the annual threshold is $24,128. The threshold is normally used against main employment, not repeated at every job.
| Check | Threshold treatment | Example gross pay | Indicative deduction |
|---|---|---|---|
| Main job, weekly | $464 weekly threshold | $750 | $34.32 |
| Secondary job | Normally no threshold | $180 weekly | $21.60 |
| Approved special rate | IRD notice controls | $180 weekly | Use notice rate |
| Approved exemption | IRD notice controls | $180 weekly | May be nil for notice period |
The two letters that switch deductions on
A borrower earning salary or wages adds SL to the appropriate tax code: for example, M SL for a main job or S SL for secondary income in the relevant band. The employer then calculates a student-loan line alongside PAYE.
Leaving SL off does not erase the obligation. Inland Revenue can identify missed deductions, update the employer and require additional amounts to catch up. It is much easier to correct the declaration when circumstances change than to wait for the balance to surface later.
Main-job and second-job deductions behave differently
For main employment, payroll subtracts the threshold for that pay period and takes 12% of the remaining complete dollars. If weekly gross pay is $750 and the threshold is $464, the starting calculation is 12% of $286, giving $34.32.
A secondary job normally does not receive another threshold because the main source has already used it. A $180 secondary weekly payment can therefore produce a $21.60 loan deduction. That sharp-looking line is collection toward the same loan, not a penalty rate on having two jobs.
Read the related student loan repayment threshold guideRead the related secondary tax guideRead the related salary after tax guide
When the standard result takes too much
A borrower studying full time whose total income is expected to remain below the annual threshold may qualify for a repayment deduction exemption. Someone whose main job does not use all of the available threshold may qualify for a special deduction rate on secondary earnings.
Those are Inland Revenue decisions with effective dates. A tailored income-tax code does not alter student-loan deductions, and an informal request to payroll is not a substitute for an approved notice.
Bonuses, final balances and other awkward pays
Student-loan deductions can also apply to extra pays, using rules specific to that payment. Do not feed a bonus into an ordinary weekly calculator and assume the result is payroll’s answer.
When the remaining loan balance is small, check myIR and talk to Inland Revenue rather than guessing when deductions should stop. Processing timing can produce an over-deduction, but the solution is a balance correction or refund—not quietly removing SL from the tax code early.
Frequently asked questions
How much student loan comes out of my pay?
For main salary or wages it is generally 12% of complete dollars above the pay-period threshold. Secondary employment is generally deducted at 12% without another threshold.
What does SL mean in a tax code?
It tells the employer that the employee has a New Zealand student loan and payroll deductions are required.
Does KiwiSaver reduce student-loan deductions?
No. Employee KiwiSaver contributions do not normally reduce the gross salary or wages used for the student-loan calculation.
Why is my second job deducting 12% from all earnings?
The main-job threshold is not normally repeated at a secondary job. A special deduction rate may be available when the main job does not use the full threshold.
Can I stop deductions while studying full time?
Possibly, if Inland Revenue approves a repayment deduction exemption and the eligibility rules are met. Studying by itself does not authorise payroll to stop.
Are student-loan deductions taken from a bonus?
They can be. Extra pays use specific payroll rules, so check the payment type and current Inland Revenue guidance.
Put the guide into practice
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Test your own numbers, compare scenarios and return to the guide to check assumptions and limitations.