The In-Work Tax Credit (IWTC) is a Working for Families payment for families who earn income from paid work. It is designed to make working families better off than they would be on a benefit.
For 1 April 2026 to 31 March 2027 the IWTC is up to $147 a week ($7,670 a year) for families with 1 to 3 children, plus $780 a year for each child after the third. That's a temporary increase from $97 a week. You qualify if you earn income from paid work and don't get a main benefit; there has been no minimum hours test since 1 July 2020. It reduces only once family income is high enough to use up the whole family tax credit through abatement.
IWTC Rates
| Children | Weekly IWTC | Annual IWTC |
|---|---|---|
| 1 to 3 children | $147 | $7,670 |
| 4 children | $162 | $8,450 |
| 5 children | $177 | $9,230 |
Temporary increase: from 1 April 2026 the maximum rose from $97 to $147 a week. IRD says it may reduce back to $97 if the cost of petrol drops below $3 a litre for four weeks, and after 31 March 2027 the maximum returns to $97 a week ($5,070 a year).
Eligibility
You qualify for the IWTC if you get Working for Families and you’re earning income from paid work. Paid work includes:
- Salary or wages as an employee
- Self-employment, even if you make a loss after expenses
- Being a shareholder-employee of a company that is earning income, even if it makes a loss and whether or not it pays you a salary
You don’t qualify if:
- You get a main benefit (such as Jobseeker Support or Sole Parent Support)
- Your only income is passive (interest, dividends, rent, royalties). Passive income alongside paid work is fine.
There is no minimum number of hours. Before 1 July 2020 a sole parent had to work at least 20 hours a week and a couple at least 30 hours between them; that rule no longer applies.
IRD’s table of government payments: you can still qualify while getting paid parental leave or NZ Super; you can’t while getting a main benefit or a student allowance; and ACC earnings-related payments may affect it (ask IRD).
IWTC and Abatement
Family income over $44,900 is abated at 27.5%. The abatement comes off the family tax credit first; only what’s left once the family tax credit reaches zero comes off the IWTC.
Example, two children: the full family tax credit is $14,375 and the full IWTC $7,670. At a family income of $100,000 the abatement is $15,152.50, which uses up the family tax credit and leaves an IWTC of $6,892.50. Both credits reach zero at a family income of about $125,064.
IWTC During Paid Parental Leave
IRD’s table shows you can get the IWTC while receiving paid parental leave. (Best Start for that child is the payment you can’t get at the same time as paid parental leave.)
Source: Inland Revenue, “In-work tax credit”, “Family tax credit” and “Government payments that affect your Working for Families” (ird.govt.nz, checked 30 September 2026).