Working for Families (WFF) tax credits are means-tested: they reduce (abate) as your family income increases. Understanding how abatement works helps you estimate your actual entitlement and avoid unexpected repayments at year end.
For 1 April 2026 to 31 March 2027, the family tax credit reduces by 27.5 cents for every dollar of family income over $44,900; any abatement left once the family tax credit reaches zero comes off the in-work tax credit. Where WFF stops depends on your number of children: with both credits it's about $101,595 for one child and $125,064 for two. Best Start has its own income test (it reduces above $79,000). Keep your income estimate up to date in myIR to avoid owing money at year end.
What Is the Abatement Rate?
| Family income | Effect on the family tax credit and in-work tax credit |
|---|---|
| Up to $44,900 | No abatement: full entitlement |
| Over $44,900 | 27.5 cents off per dollar of income over the threshold, first from the family tax credit, then from the in-work tax credit |
Example: family income $55,000
- Income over threshold: $55,000 − $44,900 = $10,100
- Abatement: $10,100 × 27.5% = $2,777.50 less WFF for the year
What Counts as Family Income
Family income is your income plus your partner’s: the income in your income tax assessments (or IR3 returns), plus or minus some adjustments for non-taxable income. Children’s own income generally isn’t included. The most common adjustments IRD lists:
| Adjustment | Effect on family income |
|---|---|
| Child support received from an ex-partner | Added (child support you pay is subtracted) |
| Private maintenance received for a child | Added (maintenance you pay is subtracted) |
| A dependent child’s passive income (interest, dividends, rent, royalties) over $500 a year | The amount over $500 is added |
| A non-resident partner’s income | Their worldwide income is included |
| Your share of a close company’s net profit, if you hold 10% or more of the voting shares | Added |
| Voluntary Bonding Scheme payments | Added |
| Money others give you for household expenses, if over $5,000 in the year | The whole amount is added |
Taxable government payments such as a main benefit, NZ Super, paid parental leave or a student allowance are already in your taxable income, so they count too. IRD’s IR215 form lists the less common adjustments.
How Abatement Works in Practice
A family with two dependent children getting the family tax credit and the in-work tax credit, 1 April 2026 to 31 March 2027 amounts (full FTC $14,375, full IWTC $7,670):
| Family income | Full FTC + IWTC | Abatement | WFF after abatement |
|---|---|---|---|
| $44,900 | $22,045.00 | $0.00 | $22,045.00 |
| $55,000 | $22,045.00 | $2,777.50 | $19,267.50 |
| $70,000 | $22,045.00 | $6,902.50 | $15,142.50 |
| $85,000 | $22,045.00 | $11,027.50 | $11,017.50 |
| $100,000 | $22,045.00 | $15,152.50 | $6,892.50 |
Actual numbers also depend on the ages and number of children, shared care, and whether you get Best Start or the minimum family tax credit.
Where WFF Reaches Zero
With the family tax credit and the full in-work tax credit, 1 April 2026 to 31 March 2027:
| Family type | Family income where both credits reach zero |
|---|---|
| 1 child | $101,595 |
| 2 children | $125,064 |
| 3 children | $148,533 |
| 4 children | $174,838 |
Without the in-work tax credit (for example, on a main benefit), the family tax credit alone reaches zero sooner: about $73,704 for one child. IRD’s Working for Families calculator gives a figure for your exact situation.
Receiving WFF Payments
Weekly or fortnightly from IRD
If you take WFF during the year, IRD pays you based on your estimated annual family income. If your actual income turns out higher, you’ll have been paid too much and must repay the difference after the year ends.
As a lump sum after the year ends
IRD works out your entitlement from your actual family income after 31 March and shows it on your income tax assessment. You don’t need to estimate, and there’s no risk of an overpayment. This suits families whose income varies (self-employment, variable hours).
Avoiding WFF Overpayment
The most common WFF issue is an overpayment that must be repaid. Causes:
- Income was higher than estimated (overtime, bonus, second job)
- A partner started earning and IRD wasn’t told
- Rental income wasn’t included in the estimate
To reduce the risk:
- Update your family income estimate in myIR whenever it changes
- If unsure, estimate a little high: IRD pays any shortfall after the year ends
- Tell IRD when your family changes (new child, a partner returns to work, a child becomes independent)
WFF and Self-Employment
Self-employed people must estimate their net profit for the year, which is harder to predict and leads to more end-of-year adjustments. Your prior year’s profit is a reasonable starting point. Only genuine business losses reduce family income.
Frequently Asked Questions
A bonus pushed our income over the abatement threshold this year. Will our WFF be cut off?
WFF is worked out on annual income. A bonus increases that year’s family income and so that year’s abatement; it doesn’t affect later years unless your income stays higher.
Does rental income affect WFF even if we made a loss on the rental?
Rental income is part of your taxable income, so it’s part of family income. A genuine net rental loss reduces taxable income and so family income.
We got a WFF overpayment notice. Do we have to pay it all back at once?
IRD can arrange instalments. Contact IRD to agree a repayment plan you can manage.
Source: Inland Revenue, “Family tax credit”, “In-work tax credit”, “Working out your family income”, “Payment options” and “Best Start” (ird.govt.nz, checked 30 September 2026).