Salary to Contract Rate Calculator NZ 2026/27

Worked example

Aroha is on a permanent salary of $80,000 and is weighing up a contracting role. Her employer currently pays 3.5% KiwiSaver on top of her salary, worth $2,800 a year, and if she goes contracting she will pay her own 1.75% ACC earner's levy, $1,400 a year, since there is no employer left to absorb it. Her target income to match her old package is therefore $80,000 + $2,800 + $1,400 = $84,200.

Starting from New Zealand's 260 standard working days a year (5 days x 52 weeks), Aroha subtracts 20 days of annual leave, 10 days of sick leave and 11 public holidays, a total of 41 unpaid days, leaving 219 available working days. She then allows 15% of that time for admin, invoicing, quoting and gaps between contracts, non-billable time that brings her down to 186.15 billable days a year.

Dividing her $84,200 target income by 186.15 billable days gives a day rate of $452.32. At 8 billable hours a day, that is an hourly rate of $56.54, or about $2,261.62 a week whenever she is fully booked. That day rate is noticeably higher than the $323.85 she would get from naively dividing $84,200 by all 260 calendar working days, because a contractor is never actually paid for all 260 of them.

How the target income is grossed up

An advertised salary is only part of what an employee receives. On top of it, most employers pay a compulsory KiwiSaver contribution, a minimum of 3.5% from 1 April 2026, straight into the employee's retirement savings. Employees also have their 1.75% ACC earner's levy already accounted for through PAYE, but a contractor operating without an employer must pay this levy themselves directly to ACC, so it needs to be added to the target rather than assumed away. This calculator adds both of these on top of the salary you enter, so the target income reflects the full value of the package you are trying to match, not just the headline salary figure.

How billable days are worked out

New Zealand has roughly 260 standard working days a year, five days a week for 52 weeks. An employee is paid for all of them regardless of whether they are actually at their desk, because annual leave, sick leave and public holidays are all paid. A contractor is paid for none of this unless a client happens to be billed for it, so this calculator subtracts 20 days of annual leave, a sick leave allowance and public holidays from the 260 to find the days that are actually available to work. It then applies a non-billable time percentage on top, since even on the days a contractor is working, some of that time goes on running the business rather than earning fee income.

What counts as non-billable time

Non-billable time covers everything a contractor spends time on that a client does not pay for directly: writing and chasing invoices, doing your own books, quoting on new work, meeting prospective clients, marketing yourself, professional development, and the unpaid gaps that can appear between one contract ending and the next starting. A contractor with a single steady long-term engagement and almost no downtime might realistically use a non-billable allowance of 5% to 10%. Someone doing a series of shorter engagements, or actively building a client base, might need 20% or more. The 15% default here is a reasonable starting point, but it is the input most worth adjusting to your own situation.

Should I add GST on top of this rate?

The day rate, hourly rate and weekly rate this calculator produces are all GST-exclusive. If your contracting turnover is likely to exceed $60,000 in a rolling 12-month period, you must register for GST with Inland Revenue and add 15% on top of your rate when you invoice clients. For business-to-business contracting this is usually neutral, since the client claims the GST back, but it does mean your invoiced total looks higher than the rate calculated here. Use the GST Calculator to add 15% to any rate you settle on.

How much more should a contractor charge than an equivalent salary?

A commonly used rule of thumb in New Zealand is that contract income needs to run somewhere between 25% and 40% above an equivalent salary to leave a contractor no financially worse off, once employer KiwiSaver, ACC, paid leave and realistic downtime are all accounted for. Where you land in that range depends heavily on your own non-billable time allowance and how many paid leave days your old job actually offered. This calculator works out the specific figure for your own inputs, rather than relying on a single rule of thumb that will not fit everyone.

What this calculator assumes

• A standard 260 working days a year (5-day week x 52 weeks), before any leave or non-billable time is subtracted.
• The on-costs added back are employer KiwiSaver and the ACC earner's levy only; it does not model income tax, business expenses, or an industry-specific ACC Work levy.
• Non-billable time, sick leave, and public holidays are entered as flat annual figures rather than modelled week by week.
• The result is a GST-exclusive rate; GST-registered contractors add 15% on top when invoicing.
• Figures are rounded for display and are a planning estimate, not a quote, tax advice, or a substitute for your own accounting records.

Who this calculator is for

This calculator is for employees in New Zealand who are weighing up a move from a permanent salary to contracting, and for contractors who want a defensible starting point when setting or renegotiating a rate with a client. It is not designed for pricing a fixed-scope project with its own cost base, and it is not a substitute for advice from an accountant on your specific tax and business structure.

Frequently Asked Questions

How do I convert a salary to a contract day rate in New Zealand?

Add the employer KiwiSaver contribution and a self-employed ACC levy to the salary you want to match, since a contractor must fund both themselves. Then divide that grossed-up figure by the number of days you can realistically bill in a year, after subtracting unpaid annual leave, public holidays, sick leave and non-billable admin time. On an $80,000 salary with the defaults above, this works out to a day rate of about $452.

Why is a fair contract rate higher than salary divided by 260 working days?

Because a contractor is not paid for the days an employee still receives salary for: annual leave, sick leave and public holidays. A contractor also loses billable time to admin, invoicing, quoting and gaps between contracts. Dividing a target income by fewer actual billable days, rather than all 260 working days, gives a higher and more realistic day rate.

Does this calculator include GST?

No. The day rate, hourly rate and weekly rate shown are GST-exclusive. If your contracting turnover is likely to exceed $60,000 in a rolling 12-month period, you must register for GST and add 15% on top of this rate when you invoice. Use the GST Calculator to work out the GST-inclusive figure.

How many working days are there in a year in New Zealand?

This calculator uses 260 working days a year, a standard 5-day week multiplied by 52 weeks. From that, it subtracts annual leave, public holidays and sick leave, then applies a non-billable time allowance, to arrive at the number of days a contractor can actually invoice.

What ACC levy should a contractor budget for?

This calculator defaults to the 1.75% ACC earner's levy that applies to everyone, capped once liable earnings pass $156,641 a year. Self-employed people who are not also PAYE employees generally also pay an ACC Work levy set by their industry classification, which is not included here since it varies widely by occupation. Adjust the ACC field upward if you know your combined CoverPlus rate, or use the Self-Employed ACC Levy Calculator to work it out first.

What is a reasonable non-billable time allowance for a contractor?

This calculator defaults to 15%, covering admin, invoicing, quoting, marketing and gaps between contracts. A contractor with a single long-term contract and little downtime might use 5% to 10%. Someone doing shorter engagements with more time spent finding the next contract might use 20% or more. Adjust it to your own experience.

How much more should I charge as a contractor than my old salary?

There is no single fixed percentage because it depends on your leave entitlements, your non-billable time and your ACC rate, but a commonly used rule of thumb in New Zealand is that contract income needs to run 25% to 40% above an equivalent salary to leave you no worse off once KiwiSaver, ACC, leave and downtime are all accounted for. This calculator works out the precise figure for your own numbers rather than relying on a rule of thumb.

Does this calculator account for KiwiSaver as a contractor?

It adds back the employer KiwiSaver contribution you would otherwise receive as an employee (3.5% by default from 1 April 2026), on the basis that a contractor who wants the same retirement saving must fund it themselves from their day rate. It does not model your own voluntary KiwiSaver contribution rate as a contractor, since that is a personal savings choice rather than an on-cost of contracting.

Related calculators

• Tax Reserve Per Invoice Calculator: once you know your rate, work out what to set aside from each invoice for tax, ACC and KiwiSaver.
• Contractor vs Employee Calculator: full net take-home comparison between a salary and a contract rate.
• Self-Employed ACC Levy Calculator: add your industry-specific ACC Work levy on top of the earner's levy.
• Tradie Charge-Out Rate Calculator: build a charge-out rate from business overheads rather than a salary to match.
• True Cost of an Employee Calculator: see the same on-costs from the other side, as an employer weighing up a hire.

Official NZ sources

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

• Inland Revenue (IRD): KiwiSaver, including employer contribution rates
• ACC: levies for self-employed people and businesses
• Employment New Zealand: annual leave, sick leave and public holidays
• Employment New Zealand: the full public holidays list, including regional anniversary days