Paid Parental Leave in NZ: Tax, Income, Working for Families and KiwiSaver

The published Paid Parental Leave maximum is a before-tax rate. Your payment depends on your work and income history, and Inland Revenue deducts PAYE and any other applicable amounts before it reaches your bank account. Employer top-ups and family-support payments can also affect how much your household has available during leave.

This guide distinguishes government Paid Parental Leave payments, known as PPL, from leave arrangements with an employer. The rates quoted apply from 1 July 2026 to 30 June 2027, a different period from the usual April-to-March income tax year.

Find the income calculation that applies to you

Your work	Start with
Employee	Ordinary weekly pay and the relevant average weekly income.
Self-employed	Net business income over the relevant six- and twelve-month periods.
Both	The work requirements for each type of work, tested separately.

The sections below apply those different calculations before considering PAYE, other household payments and time away from work. Having both kinds of income does not remove the overall maximum.

Check the qualifying work record first

Government PPL is administered by Inland Revenue. Agreeing time away from work with an employer does not, by itself, establish entitlement to those payments. The claimant must meet the primary-carer and work requirements and take time off work, subject to specific exceptions.

The work test generally requires an average of at least ten hours a week in any 26 weeks of the relevant 52-week period. For birth parents and their partners, that period runs back from the baby's due date. For someone becoming the primary carer of a child they have not given birth to, it runs back from the date they become the primary carer. The work must also have a sufficient New Zealand connection. These work-test dates should not be confused with the income-calculation dates below.

An employee may combine hours from different employee jobs, and a self-employed person may combine hours across self-employment activities. Five hours of employment and five hours of self-employment cannot simply be added to satisfy the ten-hour test. The two forms of work must be tested separately. Inland Revenue sets out the details in its work-requirements guidance.

Employees: work out gross entitlement before deductions

For 1 July 2026 to 30 June 2027, the maximum weekly payment is NZ$811.05 before tax. PPL can generally be paid for up to 26 consecutive weeks, normally in fortnightly instalments. Two maximum-rate weeks total NZ$1,622.10 before PAYE and any other deductions, not a promised net deposit.

An employee's payment is generally based on the higher of ordinary weekly pay and average weekly income, up to the cap. Where earnings are irregular, the average uses the 26 highest-income weeks in the relevant 52-week period. For birth parents and their partners, that period can end at the due date or the actual birth date. For other primary carers, it ends at the date they become the primary carer. Income from more than one employee job can be included.

For example, an eligible employee with ordinary weekly pay of NZ$690 and a calculated average weekly income of NZ$755 would generally start from NZ$755 before deductions. They do not receive an additional amount merely because that figure is below the maximum. Compare the earnings information with IRD's employee calculation guidance.

Self-employed parents compare net income over two periods

For a self-employed parent, compare net business income over twelve months divided by 52 with net income over six months divided by 26. For birth parents and their partners, those periods can be measured back from the baby's due date or actual birth date. For other primary carers, they run back from the date they become the primary carer. The higher average is used, subject to the payment limits. Net income means revenue less deductible business expenses, before personal income tax. Customer receipts and personal drawings are not substitutes for that calculation.

Suppose Ravi has NZ$33,800 of net business income for the relevant twelve months and NZ$18,200 for the most recent six months:

Calculation	Net business income	Weekly average
Twelve months	NZ$33,800 ÷ 52	NZ$650
Six months	NZ$18,200 ÷ 26	NZ$700

Under these assumptions, NZ$700 is the higher average and is below the maximum. If Ravi meets the other requirements, the illustrative fortnightly gross amount is NZ$1,400 before deductions. The accounts should support the two periods used, not merely provide a convenient recent sales total.

An eligible self-employed parent with a loss or low income may instead come within the minimum-payment rules. The minimum for 1 July 2026 to 30 June 2027 is NZ$239.50 a week before tax. It is not an extra payment added to another entitlement. Where the employee and self-employed work tests are independently satisfied, income from both may be considered, but the overall maximum still applies. See IRD's self-employed calculation guidance.

Self-employed parents need both an income calculation and a plan for time away from ordinary work.

Coordinate the tax code with employer payments

PPL is taxable, and PAYE is tax withheld towards the year's liability. An employer may also pay a regular top-up, while other amounts may relate to holiday pay or work completed before leave. Those amounts should not all be treated as if they were the same kind of weekly payment.

Where PPL overlaps with another regular income, Inland Revenue advises using a secondary tax code on the smaller income stream. A one-off bonus or other extra pay may instead require the applicable extra-pay withholding treatment. PPL tax-code changes can be made in myIR; a change for an employer's salary or wage payment generally requires an updated IR330 declaration.

A secondary code does not create a permanent separate final tax rate for that income. The annual assessment considers total taxable income and tax already deducted. An unsuitable withholding choice can nonetheless leave a bill later. Inland Revenue's other-income guidance explains permitted payments and the tax-code considerations.

In the employee example, two weeks at NZ$755 would be NZ$1,510 before deductions. Build the household budget from the expected payment after PAYE and any other applicable deductions, then add any employer top-up separately. The maximum rate alone cannot tell you the net amount.

Match Best Start to the correct child and dates

A family can receive other Working for Families credits while a parent receives PPL if it meets the relevant conditions. Best Start and PPL cannot be paid for the same child for the same period. Best Start for the new child can start after PPL ends, subject to the applicable eligibility and income rules.

That does not automatically stop Best Start for an older child. Inland Revenue expressly distinguishes an existing entitlement for a previous child from the new child's entitlement. Updating the new child's details and the family's income before PPL ends can help align the start date and avoid overlapping payments. See PPL and Working for Families.

Best Start timing is considered separately for the new baby and any older child.

Decide whether to continue KiwiSaver from PPL

KiwiSaver deductions from PPL are optional. A parent who elects deductions also receives Inland Revenue's employer contribution, currently 3.5% under its guidance. Check the election when applying or later in myIR rather than assuming that contributions continue automatically during leave. IRD's KiwiSaver guidance explains the choice.

A little contact with work is not the same as returning to work

An employee can agree up to 64 hours of keeping-in-touch work with their employer during the PPL period. That is a combined limit across employers. Under the ordinary rules, doing paid work for your employer in the first 28 days after the birth, exceeding 64 hours, starting with a new employer or starting self-employment counts as returning to work. Returning to work ends entitlement to further payments, and amounts received afterwards may need to be repaid.

The employee 64-hour rule does not apply to self-employed parents. Occasional oversight or administration may be allowed, but continuing ordinary customer work is a different matter. Calling regular work administration does not determine eligibility; the actual tasks and pattern of activity matter. Check IRD's keeping-in-touch guidance before arranging work during the payment period.

For the household budget, record the gross PPL amount, expected deductions, any employer payments and the start dates of family assistance separately. That produces a more useful forecast than multiplying the maximum weekly payment by 26 and treating the result as cash available to spend.

For the family's wider position, our Working for Families eligibility guide explains care and residence conditions, and our income and payment guide covers the family-income calculation.

Disclaimer: This article provides general New Zealand tax and accounting information, not personalised advice. Eligibility and tax treatment depend on your circumstances and the rules applying to the relevant period. Obtain professional advice before acting.