Employees who have a student loan need to declare this correctly in their tax code declaration. Student loan repayments depend on:

• How much an employee earns, and 
• If it is their main (primary income) or secondary job.

Student loan repayments based on primary income

In the 2026/27 tax year, the Student Loan repayment threshold increasing from $22,828 to $24,128 before tax. An employee must repay 12% of gross taxable earnings over the repayment threshold if they expect to earn more than $24,128 in a tax year. The repayment threshold depends on the employee's pay frequency. The threshold amount is as follows:

For example, in the 2026/27 tax year if an employee's gross taxable earnings i.e earning before tax was $800 in a week, you would calculate the student loan repayment for that week at $800 - $409 x 12% = $46.92.

You would use truncated taxable earnings when applying the calculation. For example, if an employee's weekly earnings are $934.67, you would calculate the student loan repayment for that week at $934 - $409 x 12% = $63.00. So, the cents in the employee's earnings are dropped off. 

Multiple pay runs processed in the same pay period

Scenario 1: Threshold already applied in the original pay run

If an employee is paid more than once for the same pay period, and the threshold was applied in the original pay run, the threshold will not apply again in any additional pay runs. It means that you will use 100% of the employee's earnings from the additional pay runs to calculate the student loan deduction.

For example, say, you paid the employee monthly in the normal April pay run; i.e. pay period being the 1st of April to the 30th of April; an employee's taxable earnings was $2,500. The student loan calculation for this pay run would be:

• $2,500 - $1,772.33 = $727.67
• $727.67 x 12% = $87.32

If the employee was then paid again in a supplementary pay run, for example, for a pay adjustment or bonuses for using the exact pay period; i.e., the 1st of April to the 30th April, but regardless of pay schedule used, you would not use the threshold again if the threshold was previously applied.

Using the above employee to continue the example, if you paid the employee an additional $1,000 in taxable earnings in the additional pay run. It means that the employee's student loan deduction for the extra pay run will be calculated at $1,000 x 12% = $120.    

Scenario 2: Threshold not applied in the original pay run

If an employee's taxable earnings in the original pay run are less than the threshold amount, there will be no student loan amount deducted. If, however, there is an extra pay for this employee for the same pay period and the sum of taxable earnings from the original pay run and extra pay run exceeds the threshold amount, then the combined earnings will be used to calculate the student loan deduction. 

For example, if you paid an employee weekly. In the original pay run, the employee has a taxable earnings amount of $300. It is less than the threshold amount and so we will not deduct the student loan amount. A second pay is processed for this employee for the same period, and their taxable earnings for this pay run is $300. You would then calculate the student loan amount as follows:

• $300 (earnings from first pay run) + $300 (earnings from second pay run) = $600.
• $600 - $409 = $191.
• $191 x 12% = $22.92.

If you process an additional adhoc pay run, you must use the exact pay period dates that the pay run applies to. If you choose a pay period that is a few days out from the original pay period, the threshold will apply again. The date paid of the pay run does not determine whether the threshold is applied or not, rather, it is the pay period date as this is what the Inland Revenue Department (IRD) use to determine the student loan amount required to be deducted. 

Student loan repayments based on secondary income

If the employee is working for you as a secondary job, there will be no threshold applied when calculating the student loan deduction. It means that the employee must pay 12% on every dollar earned. For example, if an employee's gross earnings i.e., earning before tax, is $800 a week, the student loan repayment for that week will be calculated at $800 x 12% = $96.

Special deduction rate

There are special circumstances where employees may be granted a Special Deduction Rate, such as where the employee:

• Has more than one job, including an income-tested benefit, student allowance, or NZ Super;
• Uses the SB SL or S SL tax code for their secondary job; 
• Earns less than the annual repayment threshold from their primary income.

Student loan adjustments

You can adjust the platform-calculated student loans if required by clicking on the Actions button for the employee in the pay run and choosing Adjust Student Loan option. You can also adjust student loan deductions in a pay run by a payroll admin by adding a new deduction category in the Deduction Categories feature.

Extra deductions

There are two other extra deductions that can apply to student loan deductions. These are:

• SLCIR: A commissioner deduction used for required additional student loan repayments. Inland Revenue Department (IRD) will advise you if you need additional deductions using SLCIR.
• SLBOR: A borrower Deduction used for voluntary additional student loan repayments. For SLBOR deductions, the employee will advise you if they wish to make additional payments to reduce their loan balance.