Tax Reserve Per Invoice Calculator

Worked example

Priya is a freelance copywriter who expects to earn $80,000 in self-employment income this year, has a student loan, and voluntarily contributes 3.5% of her income to KiwiSaver. She raises an invoice for $2,000, GST-exclusive.

On $80,000, her income tax works out to $16,277.50 across the five IRD brackets, an average rate of 20.35%. Her ACC earner's levy is 1.75% of $80,000, which is $1,400. Her student loan repayment is 12% of the $55,872 she earns above the $24,128 threshold, which is $6,704.64, an average rate of 8.38% of her total income. Add her 3.5% KiwiSaver rate and her total reserve rate is about 33.98% of every dollar she invoices.

Applied to the $2,000 invoice: $406.94 for income tax, $35.00 for ACC, $167.62 for her student loan and $70.00 for KiwiSaver, a total reserve of $679.56. That leaves Priya $1,320.44 to actually spend or pay herself from that invoice. If she transfers $679.56 to a separate account every time a similar invoice is paid, she will have already covered her income tax, ACC levy, student loan and KiwiSaver contribution for that income by the time her IR3 return is due.

How the reserve percentage is worked out

The calculator starts with the annual income figure you enter and runs it through New Zealand's progressive income tax brackets for 2026/27: 10.5% on the first $15,600, 17.5% on the next slice up to $53,500, 30% up to $78,100, 33% up to $180,000, and 39% above that. Because each bracket only taxes the portion of income within it, the result is expressed as an average rate, the total tax divided by total income, rather than the top marginal rate. That average rate is then applied to the invoice you enter, which spreads your annual tax liability evenly across every invoice you raise during the year rather than taxing an early invoice as though it were your only income.

The same approach applies to the ACC earner's levy, which is a flat 1.75% up to a liable earnings cap of $156,641, and to student loan repayments, which are 12% of income above the $24,128 annual threshold. KiwiSaver is different: since it is a voluntary savings choice rather than a tax, it is applied as a flat percentage of the invoice with no threshold, at whatever rate you choose.

Why this differs from a flat rule of thumb

You may have heard advice to simply set aside "30% of everything." That figure happens to be roughly right for someone earning around $70,000 to $90,000 with no student loan and no KiwiSaver contribution, but it understates the reserve needed at higher incomes, where more of your earnings sit in the 33% and 39% brackets, and it overstates the reserve needed at lower incomes, where a much larger share of your income falls in the 10.5% and 17.5% brackets. A student loan or a KiwiSaver contribution both add several more percentage points on top. Working from your own expected income, rather than a single number that suits nobody exactly, gives a far more accurate reserve.

GST is separate from your tax reserve

If you are GST-registered, always enter the GST-exclusive amount of your invoice into this calculator. The 15% GST you collect on top is never your money in the first place, it is held on behalf of Inland Revenue and paid across in your GST return, so it should not be mixed in with the income tax, ACC, student loan and KiwiSaver reserve this calculator produces. Use the GST Calculator to work out the GST component of an invoice separately.

Does every self-employed person need all four reserves?

No. Income tax and the ACC earner's levy apply to every self-employed person with taxable income above the relevant thresholds, but the student loan tick box only applies if you actually have a New Zealand student loan balance, and the KiwiSaver option is entirely optional. Leave either off if it does not apply to you, and the calculator will reserve only for what does. Some self-employed people also carry deductible business expenses that reduce their taxable income below their invoiced turnover; if that applies to you, use your expected taxable profit, after expenses, as the annual income figure, not your gross invoiced revenue.

What to do with the money you set aside

The reserve this calculator produces is only useful if you actually move it out of your everyday spending account. Most contractors open a second bank account purely for tax, ACC, student loan and KiwiSaver money, and transfer the reserved amount across as soon as an invoice is paid. If your residual income tax for the year is likely to be more than $5,000, you will move onto provisional tax the following year and pay in instalments during the year rather than as one lump sum at year-end, so keeping a running reserve also makes those instalments easier to meet.

Who this calculator is for

This calculator is for sole traders, freelancers, contractors and other self-employed people in New Zealand who invoice clients directly and are responsible for their own income tax, ACC levies, student loan repayments and any KiwiSaver contributions, rather than having them deducted through PAYE. It assumes your invoiced income is your only income for the year and that it is a standard taxable supply rather than a zero-rated or exempt one. Figures are rounded for display and are indicative only; rely on your own accounting records and Inland Revenue guidance when filing your actual return.

Related calculators

• Self-Employed Take-Home Calculator: annual after-tax income for the self-employed.
• Provisional Tax Calculator: standard uplift and residual income tax for the following year.
• Self-Employed ACC Levy Calculator: add your industry Work levy to the earner's levy.
• GST Calculator: work out the GST component of an invoice separately.
• Student Loan Repayment Calculator: repayments in more detail.

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): tax for self-employed people
• Inland Revenue (IRD): student loan repayment obligations
• Inland Revenue (IRD): KiwiSaver for individuals, including the self-employed
• ACC: levies for self-employed people and businesses