Contractor vs employee calculator
Compare take-home pay on the same gross income as a PAYE employee versus a self-employed contractor.
What this means for you
See what gross contract income would be needed to match the employee's net take-home pay.
Compare expense levels
Your deductible business expenses are one of the biggest levers a contractor controls — see how the gap shifts.
| Scenario | Expenses | Contractor net | Difference vs employee |
|---|---|---|---|
| Lower expenses | 5% | $0 | $0 |
| Current | 10% | $0 | $0 |
| Higher expenses | 20% | $0 | $0 |
Higher genuine deductible expenses reduce the contractor's taxable profit, narrowing the gap versus an employee on the same gross figure.
Assumptions & sources
Inland Revenue (IRD) 2026/27 PAYE tax brackets; ACC earner's and Working Safer levy rates for self-employed people.
1 July 2026
17 July 2026
Employee: gross minus PAYE tax, ACC earner levy, and KiwiSaver. Contractor: gross treated as revenue, expenses deducted to reach profit, then PAYE tax and self-employed ACC levies applied to that profit.
PAYE tax for both, ACC levies for both (employee earner levy vs contractor earner + Working Safer levy), KiwiSaver for the employee, and deductible expenses for the contractor.
The industry-specific ACC work levy (varies by occupation), paid leave value, and any GST registration or compliance costs a contractor may carry.
Related reading
What does your salary actually look like after tax in NZ?
A $80,000 salary doesn't mean $80,000 in the bank — here's what actually comes off your pay, and what's left.
Read article →
Contractor vs employee in NZ: which leaves you better off?
Higher day rate, fewer protections — here's how contracting vs employment actually stacks up financially in NZ.
Read article →What actually differs between the two
Employees and contractors pay income tax at the same marginal rates, so tax brackets aren't the main difference. What differs is: contractors can deduct genuine business expenses before tax; employees get an employer-matched KiwiSaver contribution on top of their salary, which contractors don't; contractors pay their own ACC levies (an earner's levy plus a Working Safer levy, and typically a work levy on top that varies by occupation); and employees get paid annual and sick leave that contractors have to self-fund by charging more.
Because of the leave and KiwiSaver gap, many contractors price their day or hourly rate around 20-30% above an equivalent employee salary, on top of covering their own expenses and ACC. If a contract rate looks similar to a salaried role's pay, it's often worth less once those gaps are accounted for.
Frequently asked questions
No, both pay income tax at the same marginal rates. The real differences are business expense deductions, no employer KiwiSaver match, self-paid ACC levies, and no paid leave for contractors.
Generally yes — often 20-30% more, to cover self-funded ACC levies, no employer KiwiSaver match, and no paid annual or sick leave, which an equivalent employee gets automatically.
