Contract Rate to Salary Calculator NZ 2026/27

Worked example: a $700 day rate

Aroha contracts as a project manager at $700 a day, GST-exclusive, and wants to know what salary that really compares to before she decides whether to take a permanent role instead. She assumes a standard 8-hour day, 3 weeks a year of non-billable time for admin and gaps between contracts, and the default 3.5% employer KiwiSaver rate.

Starting from 260 weekdays in the year, the calculator subtracts 20 days annual leave, 12 public holidays and 10 sick days, all of which Aroha would be paid for as an employee but is not paid for as a contractor. It then subtracts her 3 weeks, or 15 days, of non-billable time, leaving 203 billable days. At $700 a day, that is an annual gross contracting income of $700 × 203 = $142,100. Dividing by 1.035, to strip out the employer KiwiSaver contribution a permanent salary would also include, gives an equivalent salary of $142,100 ÷ 1.035 = $137,294.69. So Aroha's $700 day rate is, roughly, equivalent to a $137,295 permanent salary, before either side's income tax or her own ACC and business costs are considered.

Worked example: a $110 hourly rate

Marcus is a software contractor who charges $110 an hour over 8-hour days, so his day rate is $880. He is between contracts more often than Aroha, so he plans for 4 weeks, or 20 days, of non-billable time a year, and uses the same default 3.5% employer KiwiSaver rate. His billable days are 260 minus 20 annual leave, 12 public holidays, 10 sick days and 20 non-billable days, which comes to 198 days. His annual gross contracting income is $880 × 198 = $174,240, and dividing by 1.035 gives an equivalent salary of $174,240 ÷ 1.035 = $168,347.83. Marcus's $110 an hour is equivalent to a salary of roughly $168,348 once his lower billable-days figure is taken into account.

How the billable-days figure is built up

A standard New Zealand working year has 260 weekdays, from 52 weeks of 5 working days. A permanent employee is paid for every one of those days regardless of whether they are actually at their desk, because 4 weeks of annual leave (20 days), around 12 public holidays, and the statutory minimum of 10 days sick leave are all paid absences under the Holidays Act 2003. A contractor is not paid for any of these. On top of that, contractors lose time to work that does not get billed to a client: invoicing, marketing, quoting, professional development, and the gaps that inevitably appear between one contract ending and the next starting. This calculator lets you set that non-billable time yourself, since it varies enormously depending on how steady your pipeline of work is, and subtracts it from the 260 days alongside the fixed entitlements to arrive at your realistic billable days for the year.

Why divide by 1.035 instead of just comparing gross income

An employer paying someone $100,000 a year is not really paying only $100,000. From 1 April 2026 they must also pay at least 3.5% employer KiwiSaver on top, so the employee's total remuneration package is worth $103,500. A contractor billing the equivalent of $103,500 in gross income has to fund their own KiwiSaver contributions entirely themselves, with no employer match, so that $103,500 in contracting income is doing the same job as a $100,000 salary plus its employer KiwiSaver. Dividing your annual gross contracting income by 1 plus the employer KiwiSaver rate reverses that relationship, converting your gross contracting income back into the salary figure it is genuinely equivalent to.

What this comparison leaves out

This calculator focuses on the factors specified for a fair rate-to-salary comparison: paid leave, public holidays, sick leave, employer KiwiSaver and non-billable time. It does not attempt to model your specific income tax position, since employees and the self-employed are taxed under the same brackets but contractors can claim business expenses employees cannot. It also does not model your ACC Work levy, which depends on your industry classification unit and can range from a few cents to several dollars per $100 of earnings, or other contracting costs such as accounting fees, professional indemnity insurance, your own equipment, or income variability between contracts. Treat the equivalent salary this calculator produces as the fair starting point for a comparison, then weigh up these extra factors for your own situation.

Who this calculator is for

This calculator is for contractors, freelancers and consultants in New Zealand who are comparing their current or prospective contract rate against a permanent salaried role, and for anyone hiring who wants to understand what a quoted day rate really represents in salary terms. It assumes a standard 5-day working week and that your rate is GST-exclusive. Figures are rounded for display and are indicative only; they are general information, not financial or tax advice, and your own ACC classification, business costs and actual billable days will affect your real position.

Related calculators

• Contractor Day Rate Calculator: convert a day rate to salary, and back, from your own billable-days figure.
• Hourly to Salary Calculator: a simpler hourly rate to annual salary conversion.
• Contractor vs Employee Calculator: a fuller comparison of contracting against permanent employment.
• Tax Reserve Per Invoice Calculator: what to set aside from each invoice for tax, ACC and KiwiSaver.
• Contractor GST Threshold Calculator: work out when you need to register for GST.

Official NZ sources

This calculator is built from primary New Zealand sources. Always confirm current figures against the official source for your situation:

• Employment New Zealand: annual leave entitlements
• Employment New Zealand: sick leave entitlements
• Employment New Zealand: public holidays and anniversary dates
• Inland Revenue (IRD): employer KiwiSaver contributions
• ACC: levies for self-employed people and businesses