Understanding the In-Work Tax Credit (IWTC) in New Zealand
The In-Work Tax Credit (IWTC) is a significant component of the Working for Families package in New Zealand, designed to support low and middle-income families. This credit is intended to help offset the costs of raising children and to encourage workforce participation. This article provides a comprehensive overview of the IWTC, its eligibility criteria, calculation, and how to claim it.
What is the In-Work Tax Credit?
The IWTC is a tax credit paid to families with dependent children to help with the costs of raising them. It's a key initiative under the Working for Families policy, aiming to make work pay for families with children. The credit is paid in addition to the Family Tax Credit (FTC) and is designed to support families with at least one primary earner working 20 hours or more per week.
Eligibility Criteria for the In-Work Tax Credit
To be eligible for the IWTC, you must meet the following criteria:
- Have at least one dependent child aged 18 or under.
- Have a combined annual income (you and your partner) of less than $100,000.
- Work at least 20 hours per week (you or your partner) and meet the work test requirements.
- Be a New Zealand resident or citizen, or hold a valid work visa.
The Work Test
The work test requires that you or your partner work a certain number of hours each week. The number of hours depends on the number of dependent children you have:
- For one child: 20 hours per week.
- For two or more children: 30 hours per week (combined for both parents).
How Much is the In-Work Tax Credit?
The IWTC is calculated based on your family's income and the number of dependent children. The maximum annual payment is capped at $72.50 per week for each child. The credit is paid at a rate of $1.25 for every $100 of income earned, up to the maximum payment. Here's a table illustrating the IWTC rates:
| Combined Family Income | IWTC Rate |
|---|---|
| $36,350 or less | $1.50 for every $100 of income |
| More than $36,350 to $100,000 | $1.25 for every $100 of income |
How to Claim the In-Work Tax Credit
To claim the IWTC, you need to file an annual tax return with Inland Revenue. If you're eligible, the credit will be paid directly to you. You can also choose to have the credit paid to you throughout the year by applying for the Working for Families tax credits. To apply, you'll need to provide proof of your income and work hours.
Changes to the In-Work Tax Credit
From 1 April 2022, the maximum annual payment for the IWTC increased to $72.50 per week per child. The income threshold for the maximum payment also increased to $100,000. These changes aim to support more families and help make work pay.
For the most accurate and up-to-date information, we recommend visiting the official Inland Revenue website or contacting a tax professional.
More Details
01.04.2026 ... If your child is born before 1 April 2026, refer to the Best Start tax credit table above. Family income (before tax). Number of BSTC children ...
To estimate your entitlement use our Estimate your Working for Families Tax Credits calculator at ird.govt.nz/tools-calculators or call us on 0800 227 773.
table below. ... Information on entitlement and an online calculator will be updated after 1 April on the. Inland Revenue website https://www.ird.govt.nz in the ...
Table from Inland Revenue. Charts and maps of this data are available on Figure.NZ.
25.03.2026 ... If your family income is $42,700 or less you will be entitled to the full In-work tax credit of $5,070 per year for a family with up to three ...
24.03.2026 ... If your family income is $44,900 or less ... You'll get the full in-work tax credit if you meet the requirements for all of the tax year. If you ...
... taxteam.co.nz, Https://www.taxteam.co.nz. Page 1 of 3. Rates and ... Family tax credit In-Work tax credit. 1. $65,000. $80,000. 2. $84,500. $99,500. 3.
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Get help with the costs of raising children with Working for Families tax credit payments. Your payments are worked out based on the information you give ...
24.06.2024 ... It contains information about WFF tax credits (family tax credit, in-work ... Can you get Working for Families? https://www.ird.govt.nz/working- ...
Allowances, benefits and other income table ; Income-tested benefit. -. Y ; Independent earner tax credits. -. - ; Orphans' benefit. -. - ; Parental leave payment ...
Working for Families Tax Credits are payments for families with dependent children aged 18 and under. The payments are to help you raise your family.
30.06.2022 ... Table 2 below demonstrates the relative generosity of the Australian tax credit system compared to the New Zealand system, particularly for ...
15.12.2025 ... Marginal Tax Rate Explained · The first $15,600 is taxed at 10.5% · Income between $15,601 and $53,500 is taxed at 17.5% · Income between $53,501 ...
Working for Families is not a benefit paid by Work and Income under the Social Security Act, it is a system of tax credits administered by Inland Revenue.
Once you earn over $160 a week before tax, your benefit reduces by 70 cents for every extra $1 of income you earn. To work it out, take your income - 160 and x ...
... tax codes). 98 www.ird.govt.nz. Go to our website for information, services ... help you manage your tax business like checking your tax code, or your ...
... nz/working-for-families/payment-types. 2 For a table showing how payments abated as at the time of the survey, see: https://www.ird.govt.nz/-/media/project ...
01.04.2015 ... The table below shows how much you can earn and still receive Working for Families Tax Credits. The amounts are based on your eldest child being ...
Parents may have to deal with both WINZ and IRD in relation to their tax credits if they are on benefits. Contact: Susan St John s.stjohn@auckland.ac.nz. Page 2 ...
