Standard deductions
Applies to employees with a standard student loan deduction code (SL).
Automatically deducted from the employee’s gross income at a rate of 12% once the income exceeds the repayment threshold.
1. Hover on Setup, then click Team Manager.
2. Click on the applicable employee to open the General tab.
3. Click on Employment Details.
4. Ensure the Tax Code has an ‘SL’ in it e.g. M SL.
5. Ensure the SL Special Rate % is left blank.
6. Click Save if any changes were made.
Example
An employee is paid $1000 gross in a weekly pay period and has the tax code M SL.
They will pay $64.32 towards their student loan.
This is calculated by subtracting the weekly threshold ($464 for the 2025 financial year) from the gross income ($1000 – $464 = $536). 12% is then payable on $536. Therefore, $536 x 12% = $64.32 as the student loan deduction.
Compulsory deductions
When there is a significant under-deduction, the IRD will issue a ‘Student Loan Extra Deduction Notice.’ Typically, the extra deduction rate is 5%.
1. Hover on Setup, then click Team Manager.
2. Click on the applicable employee to open the General tab.
3. Click on Payroll.
4. In the Compulsory student loan deductions field, enter the percentage specified by the IRD.
5. If the IRD has specified a date range, enter the dates in the From and To fields. If no date range is provided, leave these fields blank.
6. Click Save.
Example
An employee is paid $1000 gross in a weekly pay period and has the tax code M SL. They also have 5% entered in the Compulsory student loan deductions field.
They will pay $64.32 towards their student loan as part of the standard deduction and an additional $26.80 for the compulsory deduction.
This is calculated by subtracting the weekly threshold ($464 for the 2025 financial year) from the gross income ($1000 – $464 = $536). 12% is then payable on $536. Therefore, $536 x 12% = $64.32 as the student loan deduction.
The compulsory student loan deduction is calculated by subtracting the weekly threshold ($464 for the 2025 financial year) from the gross income ($1000 – $464 = $536). 5% is then payable on $536. Therefore, $536 x 5% = $26.80 as the compulsory student loan deduction.
Total student loan deduction is therefore $91.12.
Special deductions
Used when the IRD specifies a unique rate for an employee’s student loan deduction, typically to reduce the amount the employee repays each pay period.
1. Hover on Setup, then click Team Manager.
2. Click on the applicable employee to open the General tab.
3. Click on Employment Details.
4. Enter the SL Special Rate %.
5. Click Save.
Example
An employee is paid $1000 gross in a weekly pay period and has the tax code M SL. They have 10% entered in the SL Special Rate % field.
They will pay $53.60 towards their student loan.
This is calculated by subtracting the weekly threshold ($464 for the 2025 financial year) from the gross income ($1000 – $464 = $536). 10% is then payable on $536. Therefore, $536 x 10% = $53.60 as the student loan deduction.
Voluntary deductions
Used for employees who wish to make additional voluntary repayments towards their student loan.
1. Hover on Setup, then click Team Manager.
2. Click on the applicable employee to open the General tab.
3. Click on Payroll.
4. In the Voluntary student loan deductions field, enter the additional dollar amount to be contributed each pay period.
5. If the voluntary contributions are for a set date range, enter the dates in the From and To fields. If no date range is entered, the contributions will continue until manually stopped.
6. Click Save.
Example
An employee is paid $1000 gross in a weekly pay period and has the tax code M SL. They also have $50 entered in the Voluntary student loan deductions field.
They will pay $64.32 towards their student loan as part of the standard deduction and an additional $50 for the voluntary deduction.
This is calculated by subtracting the weekly threshold ($464 for the 2025 financial year) from the gross income ($1000 – $464 = $536). 12% is then payable on $536. Therefore, $536 x 12% = $64.32 as the student loan deduction.
The voluntary student loan deduction amount pulls through from Team Manager.
Total student loan deduction is therefore $114.32.