What Is the In Work Tax Credit NZ?

The In Work Tax Credit NZ is one of the payments available through Working for Families.

It is designed to support families with dependent children where the eligible caregiver is in paid work.

The payment is administered through Inland Revenue as part of the Working for Families system. Eligible families can choose to receive their Working for Families payments weekly, fortnightly or as a lump sum after the end of the tax year.

Who Can Get In Work Tax Credit NZ?

To qualify for Working for Families, you generally need to:

• Be aged 16 or over
• Care for a dependent child
• Be the principal caregiver
• Meet the relevant residency requirements

For the In Work Tax Credit, you also need to meet the relevant paid-work requirements.

Your circumstances can affect eligibility, so meeting one condition does not automatically mean you will receive the payment.

What Counts as Paid Work?

One important feature of the In Work Tax Credit NZ is that paid work does not necessarily mean traditional employment.

Salary and Wages

Employees earning a salary or wage can qualify if they meet the other requirements.

Self-Employed Income

Self-employed people can also qualify if they are earning income from their work.

A self-employed person can potentially qualify even if they make a loss after deducting business expenses, provided the relevant requirements are met.

Shareholder Employees

Certain shareholder employees can also qualify where their company is earning income.

The eligibility rules for shareholder employees can be different from those applying to ordinary employees, so the specific circumstances should be reviewed.

Does Passive Income Qualify for In Work Tax Credit?

Passive income on its own does not qualify as paid work.

Examples of passive income include:

• Interest
• Dividends
• Rent
• Royalties

However, you may still qualify if you receive passive income and also earn income from paid work, provided you meet the other eligibility requirements.

How Much Is In Work Tax Credit in 2026?

There has been an important change for the 2026–27 tax year.

From 1 April 2026, the maximum weekly In Work Tax Credit increased by $50.

The temporary increase is scheduled to apply from 1 April 2026 to 31 March 2027, subject to the applicable government conditions.

For families with one, two or three children, the full-year maximum is currently $7,670 where the family meets all requirements for the full tax year.

Families with four or more children may receive an additional amount for each child after the first three, subject to the applicable rules.

Is the $147 Per Week Payment Automatic?

Not necessarily.

The $147 per week figure is the maximum amount for someone entitled to the full payment under the current temporary settings.

Your actual entitlement can be lower depending on:

• Family income
• Number of children
• Weeks you qualify
• Changes in family circumstances
• Other Working for Families entitlements

Inland Revenue calculates the entitlement based on your circumstances.

How Does Family Income Affect In Work Tax Credit?

Your family income is an important part of the calculation.

If your family income is $44,900 or less, you can receive the full In Work Tax Credit if you meet the requirements for the entire tax year.

If your family income is above $44,900, your entitlement can be reduced through an abatement.

The current abatement rate is 27.5% in the relevant calculation.

What Is the In Work Tax Credit Abatement?

An abatement reduces the amount of Working for Families you receive as family income increases.

For some families, the Family Tax Credit abates first. Any remaining abatement can then reduce the In Work Tax Credit.

Where the relevant conditions apply, the calculation can involve taking family income above the applicable threshold and applying the relevant abatement rate.

Example

Suppose your relevant family income is:

$47,000

Difference above $44,900:

$47,000 − $44,900 = $2,100

Abatement:

$2,100 × 27.5% = $577.50

If your full In Work Tax Credit entitlement was $7,670:

$7,670 − $577.50 = $7,092.50

Your annual entitlement in this example would therefore be $7,092.50, assuming the other eligibility requirements are met.

Do You Need to Work a Minimum Number of Hours?

The current In Work Tax Credit rules do not use the old minimum-hours test that applied before 1 July 2020.

Instead, you generally need to be in paid work for the relevant week and meet the other eligibility conditions.

This is important because older information about the In Work Tax Credit may still mention previous minimum-hours requirements.

Can You Get In Work Tax Credit If You Are Self-Employed?

Yes, potentially.

Self-employed people can qualify if they are earning income from their work and meet the other Working for Families requirements.

This can make the payment particularly relevant to:

• Sole traders
• Freelancers
• Contractors
• Small business owners
• Self-employed professionals

However, the calculation of family income can be more complicated for people with business income, so your overall circumstances should be considered.

Can You Get In Work Tax Credit While Receiving a Benefit?

Generally, no if you are receiving a main benefit.

There are specific rules for other payments, including:

• Paid parental leave
• New Zealand Super
• Unsupported Child’s Benefit
• ACC earnings-related payments

The effect can vary depending on the payment and your individual circumstances.

What Happens If You Take an Unpaid Break From Work?

There is a limited rule for short unpaid breaks.

You can generally continue receiving the In Work Tax Credit if your unpaid break from paid work is two weeks or less, provided you otherwise meet the requirements.

Examples can include:

• Moving to a new job
• Leave without pay
• Certain temporary breaks from work

If your work circumstances change, update Inland Revenue as soon as possible so your entitlement can be assessed correctly.

How Are In Work Tax Credit Payments Made?

Working for Families payments can generally be received in several ways.

Weekly

Payments can be made weekly based on your estimated entitlement.

Fortnightly

Payments can be made every two weeks.

End-of-Year Lump Sum

You can choose to receive your entitlement after the end of the tax year.

For weekly or fortnightly payments, Inland Revenue initially uses information about your family circumstances and estimated family income. Once the tax year ends, your actual entitlement can be calculated using your actual information.

What Is a Working for Families Square-Up?

If you receive Working for Families during the year, your payments are generally based on estimates.

After 31 March, Inland Revenue can calculate your actual entitlement based on your actual family income and circumstances.

This is commonly referred to as the Working for Families square-up.

If you received less than your actual entitlement, you may receive the difference.

If you received too much, you may have to repay the overpayment.

Why You Should Update IRD When Your Circumstances Change

Your Working for Families entitlement can change during the year.

You should keep Inland Revenue informed if there is a significant change to:

• Family income
• Employment
• Working arrangements
• Number of dependent children
• Care arrangements
• Relationship status
• Other relevant circumstances

Failing to update your information can increase the risk of receiving too much and later having to repay an overpayment.

Who Is a Dependent Child for Working for Families?

A dependent child is generally a child aged 18 or under who is in your care and meets the relevant conditions.

Depending on their age and circumstances, this can include a child who is financially dependent on you and continues to meet the relevant education or dependency requirements.

Care arrangements are also important. Shared-care arrangements can affect Working for Families eligibility and payment amounts.

Do You Need to Be a NZ Tax Resident?

Working for Families has specific residency requirements.

One route to meeting the requirements can involve being a New Zealand resident, having lived in New Zealand for the required period and being a New Zealand tax resident while receiving Working for Families.

There are also circumstances where a child’s residency status can affect eligibility.

New or returning residents should take particular care because Working for Families can interact with rules relating to transitional residents.

Can You Receive In Work Tax Credit With Other Working for Families Payments?

Yes, potentially.

Working for Families includes several types of payments:

• Family Tax Credit
• In Work Tax Credit
• Minimum Family Tax Credit
• Best Start

You may qualify for more than one type depending on your circumstances.

The payments are considered as part of your overall Working for Families entitlement.

How Do You Apply for In Work Tax Credit NZ?

The In Work Tax Credit is part of the Working for Families system.

You can apply for Working for Families through Inland Revenue’s available application channels, including myIR.

Before applying, make sure you have accurate information about:

• Your family income
• Your partner’s income
• Dependent children
• Care arrangements
• Employment or self-employment
• Residency
• Other government payments

How Can You Estimate Your In Work Tax Credit?

Inland Revenue provides a Working for Families calculator that can be used to estimate your entitlement.

Your estimate can change if:

• Your income changes
• Your family situation changes
• Your care arrangements change
• You have shared care
• You receive other relevant payments

The calculator provides an estimate rather than a guaranteed final entitlement.

In Work Tax Credit NZ: Common Mistakes to Avoid

Assuming Everyone Who Works Qualifies

Working does not automatically mean you qualify. You must meet the Working for Families and In Work Tax Credit requirements.

Using Outdated Information

Older articles may still refer to previous minimum-hours requirements or the former $97 weekly maximum.

Under the current temporary settings, the maximum increased to $147 per week from 1 April 2026.

Not Updating Your Income Estimate

If your actual family income is higher than your estimate, you could receive too much during the year and have an overpayment to repay.

Forgetting About Your Partner’s Income

Working for Families calculations generally consider family income, which can include your income and your partner’s income.

Ignoring Changes in Care Arrangements

Shared care can affect Working for Families entitlement.

Assuming Passive Income Counts as Paid Work

Interest, dividends, rent and royalties alone do not qualify as paid work for In Work Tax Credit purposes.

In Work Tax Credit NZ vs Family Tax Credit

These payments are both part of Working for Families but serve different purposes.

The Family Tax Credit is the main Working for Families payment, while the In Work Tax Credit is specifically linked to being in paid work.

In Work Tax Credit NZ: 2026 Checklist

Before applying or checking your entitlement, consider the following:

• Do I have a dependent child?
• Am I the principal caregiver?
• Do I meet the residency requirements?
• Am I earning income from paid work?
• Am I self-employed or employed?
• Am I receiving any government payments that could affect my entitlement?
• Do I know my expected family income?
• Have I included my partner’s relevant income?
• Have my working circumstances changed?
• Have my care arrangements changed?
• Have I checked the latest Working for Families rules?
• Have I used the Inland Revenue calculator to estimate my entitlement?

What If You Are Unsure About Your Working for Families Entitlement?

Working for Families calculations can become complicated when you have:

• Self-employed income
• Multiple income sources
• Overseas income
• Investment income
• Changing employment
• Shared-care arrangements
• A partner with different income
• Government payments
• Changes in residency

Inland Revenue’s current calculator can provide an estimate, but your final entitlement depends on the information relevant to your circumstances.

If your circumstances are complicated or you are unsure whether your information has been reported correctly, professional guidance may help you understand your position.