If you have ever looked at your payslip in New Zealand and wondered what the ACC deduction is, you are not alone. The ACC earner's levy is one of those charges that comes out of every worker's pay, yet most people have little idea what it is for or how it is worked out.
In this guide, we will explain what the ACC earner's levy is, how the rate is set, what income it applies to, and what you actually get in return for paying it.
What Is ACC?
ACC stands for the Accident Compensation Corporation. It is a New Zealand government scheme that provides no-fault personal injury cover for everyone in New Zealand — residents, citizens, and visitors alike. If you are injured in an accident, ACC covers the cost of your treatment, rehabilitation, and in some cases a portion of your lost income, regardless of who was at fault.
In exchange for this cover, New Zealand does not allow you to sue for personal injury damages (with very limited exceptions). The ACC scheme replaces the right to sue with guaranteed, no-fault cover for everyone.
What Is the Earner's Levy?
The earner's levy is the contribution that employees and self-employed workers make to the ACC scheme. It is separate from the employer's ACC levy (the work levy), which your employer pays based on the risk profile of their industry.
The earner's levy covers non-work injuries — things like sports injuries, accidents at home, car crashes, and any other personal injury that does not happen at work. Work-related injuries are covered by the employer's work levy.
Current Earner's Levy Rate
For the 2025-26 tax year, the ACC earner's levy rate is $1.60 per $100 of liable earnings, or 1.60%. This rate is set by the government and reviewed periodically.
There is a maximum income cap on which the earner's levy is charged. For 2025-26, the cap is $142,283. This means that if you earn more than $142,283, you only pay the earner's levy on the first $142,283 of your income. Any earnings above that are not subject to the levy.
At the maximum, the most you would pay in earner's levy in a year is approximately $2,276.53 (1.60% of $142,283).
How the Levy Is Deducted
If you are an employee, the earner's levy is deducted from your pay by your employer along with PAYE. It appears as a separate line item on your payslip, usually labelled "ACC earner's levy" or simply "ACC."
The deduction is calculated on your gross (before-tax) earnings each pay period. For example, if you earn $1,000 gross per week, the earner's levy would be $16.00 per week (1.60% of $1,000).
If you are self-employed, you pay the earner's levy as part of your annual tax return. IRD will calculate the amount based on your net self-employment income and include it in your tax assessment.
What Does the Earner's Levy Cover?
In return for paying the earner's levy, you are covered for:
- Medical treatment costs — doctor visits, hospital stays, surgery, physiotherapy, and other treatment related to a personal injury.
- Weekly compensation — if you are unable to work because of an injury, ACC pays 80% of your pre-injury earnings (up to a cap) after the first week off work.
- Rehabilitation — including physical rehabilitation, vocational rehabilitation to help you return to work, and social rehabilitation to help you live independently.
- Lump sum compensation — for permanent impairment resulting from an injury.
- Funeral grants — in the event of a fatal injury, ACC provides a funeral grant and ongoing support to dependants.
It is worth noting that ACC only covers injuries caused by accidents. It does not cover illness, disease, or gradual process injuries (with some exceptions for work-related gradual process diseases). If you get sick with the flu, ACC does not cover that. If you slip and break your arm, it does.
ACC Weekly Compensation: How Much Would You Get?
If you are injured and cannot work, ACC pays weekly compensation at 80% of your pre-injury weekly earnings. This is calculated based on your earnings in the 52 weeks before the injury (or a shorter period if you have not been working that long).
There is a maximum — the weekly compensation is capped at 80% of the maximum insurable earnings ($142,283 per year for 2025-26). So the most you could receive per week is approximately $2,189.
The first week after your injury is a stand-down period. Your employer is required to pay you for the first week (at 80% of your normal pay), and ACC kicks in from the second week onwards.
ACC for the Self-Employed
Self-employed people pay the earner's levy on their net self-employment income. However, they also have the option to purchase additional ACC cover, called CoverPlus Extra, which lets you choose a fixed level of agreed compensation rather than having it based on your actual earnings.
This can be useful if your self-employment income fluctuates significantly. With CoverPlus Extra, you agree on a level of cover upfront, and that is what you receive if you are injured — regardless of what your actual earnings were at the time.
How ACC Affects Your Take-Home Pay
The earner's levy is a relatively small deduction compared to income tax and KiwiSaver, but it does add up. For someone earning $70,000 per year, the annual earner's levy is $1,120, or about $43 per fortnight.
To see exactly how the ACC earner's levy affects your pay, use our New Zealand salary calculator. It shows the ACC deduction alongside PAYE and KiwiSaver so you can see the full picture of where your money goes.
Common Questions About the Earner's Levy
Can I opt out of paying the earner's levy? No. The earner's levy is compulsory for all earners in New Zealand. You cannot opt out, even if you have private medical insurance.
Do I still pay the levy if I am on a temporary visa? Yes. Everyone working in New Zealand pays the earner's levy, regardless of their visa or residency status. In return, you are fully covered by ACC while you are in the country.
Is the earner's levy tax-deductible? For employees, no — it is simply deducted from your pay. For self-employed people, the earner's levy is a deductible business expense.
Final Thoughts
The ACC earner's levy is a compulsory cost of working in New Zealand, but what you get in return is comprehensive, no-fault accident cover that would cost significantly more if you had to purchase equivalent private insurance. While no one likes seeing deductions on their payslip, understanding what the ACC levy covers can give you peace of mind that if an accident does happen, you are protected.