Working for Families — Family Tax Credit
Rule-based guide to the Family Tax Credit (FTC), Inland Revenue's foundational Working for Families component. FTC pays $7,524 per year for the eldest child plus $6,130 per additional child in 2025-26, rising to $7,921 and $6,454 from 1 April 2026. The credit abates at 27.5 cents per dollar of family income above the $44,900 threshold and, unlike the work-tested In-Work Tax Credit and Minimum Family Tax Credit, FTC is paid whether parents are on a main benefit or in paid work.
Don't want to read the full rule? Get a personalised report on every New Zealand government benefit you may qualify for in under 3 minutes.
Quick Answer
You qualify if you have at least one dependent child (under 18, or 18-19 still at school) and the primary caregiver is a New Zealand tax resident. FTC works whether you are on a main benefit or in paid employment — there is no work-hours test.
You are blocked if you have no dependent children, or your family income is high enough that the 27.5% abatement reduces entitlement to $0. Cutout for one child is roughly $72,259/yr; for two children $94,556/yr.
Rate summary: $7,524/yr eldest + $6,130/yr per additional child (2025-26). From 1 April 2026 these rise to $7,921 and $6,454. Abated at 27.5 cents per dollar of family income above $44,900/yr (both partners' incomes pooled).
What Is This Payment?
The Family Tax Credit is the foundational tax-credit component of Working for Families, administered by Inland Revenue (IRD). Most New Zealand families with dependent children receive FTC — it is the broadest of the four WFF credits and the one most parents start with.
Unlike Jobseeker Support, Sole Parent Support, or NZ Super, FTC is not a Work and Income main benefit. It is a tax credit paid by IRD: you can receive it weekly or fortnightly through the PAYE system, or as an end-of-year lump sum after your IR3 income tax return is squared up. Payment frequency is your choice and can be changed through myIR.
The design intent is to give consistent per-child support that scales with family size and abates as family income rises. The same formula applies whether the parents are on a benefit or in paid work, which is the key feature distinguishing FTC from the In-Work Tax Credit (work-tested) and the Minimum Family Tax Credit (working-poor floor).
FTC is one of four Working for Families components: FTC (this credit), the In-Work Tax Credit (extra weekly amount for working families), the Best Start Tax Credit (supplementary for children under 3), and the Minimum Family Tax Credit (top-up so working families clear a minimum after-tax income floor). FTC is the most universal — the others have additional gates around paid work, child age, or income source.
FTC is non-taxable income, so it does not reduce your eligibility for other income-tested supports such as the Accommodation Supplement or Community Services Card. It does, however, count for the family-income test of the other three WFF credits, since they all share a common income definition.
How Much Can You Get?
The amount is calculated by a fixed formula. Inputs are the number of dependent children and family annual income (your annual income plus your partner's annual income).
Formula:
fullEntitlement = ftcEldest + (children − 1) × ftcEachAdditionalexcess = max(0, familyAnnualIncome − $44,900)abatement = excess × 0.275FTC = max(0, fullEntitlement − abatement)
For 2025-26 use $7,524 (eldest) and $6,130 (each additional). For 2026-27 onwards use $7,921 and $6,454.
Worked example 1 — 2 children, $40,000 family income (2025-26). Full entitlement = $7,524 + $6,130 = $13,654/yr. Family income is below the $44,900 threshold, so excess = $0 and abatement = $0. Final FTC = $13,654/yr (about $262.58 per week).
Worked example 2 — 2 children, $60,000 family income (2025-26). Full entitlement = $13,654/yr. Excess = $60,000 − $44,900 = $15,100. Abatement = $15,100 × 0.275 = $4,152.50. Final FTC = $13,654 − $4,152.50 = $9,501.50/yr (about $182.72 per week).
Worked example 3 — 1 child, $90,000 family income (2025-26). Full entitlement = $7,524/yr. Excess = $90,000 − $44,900 = $45,100. Abatement = $45,100 × 0.275 = $12,402.50. Because the abatement exceeds the entitlement, the result is floored at zero: $0/yr. A single-child family loses all FTC by about $72,259 family income.
1 April 2026 uplift: the eldest-child rate rises by $397 (from $7,524 to $7,921) and the additional-child rate rises by $324 (from $6,130 to $6,454). The $44,900 threshold and the 0.275 abatement rate are unchanged. A 2-child family with income at or below threshold will see annual entitlement rise from $13,654 to $14,375 — an increase of $721/yr.
Eligibility Conditions
childCount > 0— at least one dependent child counted across the age bucketscount_under_1,count_1_to_3,count_4,count_5_to_13, andcount_14_to_17. Children aged 18 or 19 still at secondary school may also count under IRD rules.family_annual_income < cutout— entitlement abates to $0 once family income exceeds the cutout for your family size. Cutout =$44,900 + fullEntitlement / 0.275.- Cutout points (2025-26):
1 child ≈ $72,259/yr;2 children ≈ $94,556/yr;3 children ≈ $116,853/yr;4 children ≈ $139,150/yr. From 1 April 2026 the cutouts shift up by roughly $1,400 per child. primary_caregiver_residency = nz_tax_resident— the principal caregiver who claims FTC must be a New Zealand tax resident. The children themselves must also be present in New Zealand.employment_statusis not a gate. FTC is paid to recipients of Sole Parent Support, Jobseeker Support, Supported Living Payment, NZ Super (where applicable), and to families in paid work.family_annual_income = annual_income + partner_annual_income— both partners' incomes are pooled regardless of who is the principal caregiver.
How To Apply
Channel. Apply through Inland Revenue. Use the myIR online portal at ird.govt.nz/working-for-families/apply or call IRD on 0800 227 773. If you are on a main benefit through Work and Income, you can also start the WFF registration through MSD, which will hand off to IRD.
Evidence to have ready. IRD numbers for the principal caregiver, the partner, and each child; a New Zealand bank account for payments; estimated annual income for both partners; and birth or guardianship evidence for the children if they are not already linked to your IRD record.
Timeline. Applications take roughly 1–2 weeks for IRD to set up. You choose the payment frequency at registration: weekly, fortnightly, or annual lump sum. Weekly and fortnightly payments are based on the income estimate you provide; the lump-sum option pays the full year's entitlement after your annual income is confirmed.
Annual square-up. After 31 March each year, IRD reconciles your interim payments against your actual annual income. If your actual income was lower than estimated, IRD pays you the difference. If your actual income was higher, IRD recovers the over-payment, usually by reducing future WFF instalments or by a direct debt.
Estimating income matters. Under-estimating means larger interim payments now but a year-end debt; over-estimating means smaller interim payments but a year-end refund. Update your estimate through myIR whenever your income changes by more than about 10% — a salary rise, partner returning to work, or losing a job all warrant an immediate update.
Rule-Based Scenarios
Scenario 1 — Tipene, sole parent on SPS with 2 children. Tipene receives Sole Parent Support and looks after a 4-year-old and a 9-year-old. SPS pays around $25,000/yr after tax, well below the $44,900 FTC threshold; he has no other income and no partner income to pool. Full FTC entitlement is $7,524 (eldest) + $6,130 (one additional) = $13,654/yr. Because family income is below the threshold, no abatement applies. Tipene receives the full $13,654/yr, paid weekly at about $262 alongside his SPS payment, and there is no employment test blocking him.
Scenario 2 — Pania and Hone, working couple with 3 children. Pania earns $50,000 and Hone earns $30,000, giving family income of $80,000. They have three dependent children aged 6, 9, and 12. Full entitlement = $7,524 + 2 × $6,130 = $19,784/yr. Excess over the $44,900 threshold = $35,100. Abatement = $35,100 × 0.275 = $9,652.50. Final FTC = $19,784 − $9,652.50 = $10,131.50/yr, roughly $194.84 per week. Because both partners are in paid work, they may also qualify for the In-Work Tax Credit on top.
Scenario 3 — Roimata, single parent with 1 child at $90,000. Roimata earns $90,000 from her management role and has one dependent 8-year-old. Full FTC = $7,524/yr. Excess = $90,000 − $44,900 = $45,100. Abatement = $45,100 × 0.275 = $12,402.50, which exceeds the entitlement. FTC is floored at $0/yr. Because she has no qualifying child receiving WFF, Roimata is also blocked from the Independent Earner Tax Credit (IETC excludes anyone with a dependent child entitled to FTC, even if abated to zero — a common surprise).
Common Mistakes
- Confusing FTC with the In-Work Tax Credit. FTC is universal — it pays whether you are on a main benefit or in paid work. The IWTC is work-tested (couples need at least 30 paid hours per week combined; sole parents need 20). Mixing the two leads to either missing the IWTC after returning to work, or expecting IWTC while still on Jobseeker Support.
- Forgetting to update IRD when income changes. Interim weekly and fortnightly payments use your estimated annual income. If your actual income climbs $10,000 above the estimate, you can finish the year with a square-up debt of roughly $2,750 (the abatement on that extra $10,000 at 27.5%). Update your myIR estimate within a fortnight of any material income change.
- Pooling household income wrong. Both partners' annual incomes count, regardless of who is the principal caregiver. Some applicants only declare the caregiver's income, end up over-paid through the year, and face a year-end debt. Family income = your annual income + partner's annual income (partner_income × 52 if quoted weekly).
- Missing the 1 April 2026 uplift. The eldest-child rate rises from $7,524 to $7,921 (+$397) and additional-child rises from $6,130 to $6,454 (+$324). A 2-child family with income below threshold gains $721/yr from 1 April 2026. Plan budgets using the rate that applies to the tax year you are claiming.
- Forgetting the cutout. A 2-child family loses all FTC at family income of $44,900 + ($13,654 / 0.275) = $94,556/yr. Some families plan as if FTC is permanent regardless of pay rises — a $20,000 promotion can wipe out the credit entirely if family income was already above threshold.
- Confusing tax year boundaries. The Working for Families tax year runs 1 April to 31 March, not 1 July (KiwiSaver) or the calendar year. Rate changes and threshold updates take effect on 1 April. Quoting last year's $7,524 figure after 1 April 2026 will under-state the entitlement by $397 per eldest child.
Related Benefits
- In-Work Tax Credit — paired WFF component for working families with children; can be received alongside FTC when the work-hours test is met.
- Best Start Tax Credit — supplementary WFF credit for children under 3; stacks on top of FTC and uses the same family-income definition.
- Minimum Family Tax Credit — top-up for working families to reach a minimum after-tax income floor; complements FTC for low-paid working parents.
- Independent Earner Tax Credit — IRD tax credit for adults without dependent children; mutually exclusive with WFF (cannot receive IETC and any WFF credit in the same period).
- Sole Parent Support — main benefit for single parents with dependent children; SPS recipients still receive FTC alongside, paid by IRD separately from MSD.
- Jobseeker Support — main benefit for jobseekers; recipients with children still receive FTC at the full rate (no employment test blocks FTC).
Frequently Asked Questions
How much is FTC for the eldest child in 2025-26?
The eldest-child rate is $7,524 per year for the 2025-26 tax year (1 April 2025 to 31 March 2026). From 1 April 2026 it rises to $7,921 per year. Each additional child is paid $6,130 in 2025-26 and $6,454 from 1 April 2026. These rates apply before any family-income abatement at 27.5 cents per dollar above $44,900.
Does FTC stop when I start work?
No. Family Tax Credit is income-tested but not employment-tested. You can receive FTC whether you are on Sole Parent Support, Jobseeker Support, Supported Living Payment, or in paid work. Returning to work can actually unlock the additional In-Work Tax Credit (IWTC), which is paid on top of FTC for couples working 30+ paid hours per week combined or sole parents working 20+ hours.
Is FTC taxable?
No. Working for Families tax credits, including FTC, are paid by Inland Revenue but are non-taxable. They do not appear in your assessable income for tax or for income-tested supports such as the Accommodation Supplement, Community Services Card or Disability Allowance. They do, however, count toward the family-income definition used inside Working for Families itself.
What is the income threshold for FTC?
The family income threshold is $44,900 per year. Family income below that produces the full entitlement with no reduction. Each dollar of family income above $44,900 reduces the entitlement by 27.5 cents (the abatement rate). Family income pools both partners' annual incomes regardless of who is the principal caregiver.
Can I get FTC and IETC together?
No. The Independent Earner Tax Credit (IETC) is for adults without dependent children entitled to Working for Families. If you receive any WFF credit — including FTC abated to a small positive amount — you cannot also claim IETC for the same period. Anyone with a qualifying dependent child is treated as entitled to FTC even if the credit abates to $0, so high-income parents are typically blocked from both.
When does FTC abate to zero?
The cutout depends on family size. Using 2025-26 rates, FTC reaches $0 at roughly $72,259/yr family income for one child, $94,556/yr for two children, $116,853/yr for three children, and $139,150/yr for four children. The formula is cutout = $44,900 + (full entitlement / 0.275). From 1 April 2026 each cutout point shifts up by about $1,400 per child due to the rate uplift.
Find every New Zealand government benefit you're entitled to
Benefit Check uses the same rule engine behind this page to scan all 47 NZ benefits in seconds. Answer a short questionnaire and get your full eligibility list with calculated weekly amounts.