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.
WFF credits reduce by 27 cents for every dollar of family income over $42,700. Once your income is high enough that the credit reaches zero, you stop receiving WFF. The exact income at which WFF cuts out depends on how many children you have and which credits you receive. For a family with two children receiving the Family Tax Credit and In-Work Tax Credit, WFF may extend to incomes of $90,000–$110,000+. Update your income estimate with IRD to avoid owing money at year end.
What Is the Abatement Rate?
From the 2023–24 tax year onwards:
| Income range | WFF abatement rate |
|---|---|
| Up to $42,700 | No abatement — full WFF entitlement |
| Over $42,700 | 27 cents reduction per dollar of income |
Example: Family income of $55,000
- Income over threshold: $55,000 − $42,700 = $12,300
- Abatement: $12,300 × 27% = $3,321 reduction in annual WFF
Family Scheme Income
Abatement is based on family scheme income — which is broader than just taxable wages. It includes:
| Income type | Included in family scheme income? |
|---|---|
| Wages and salary | Yes |
| Self-employment income | Yes |
| Rental income (net) | Yes |
| Interest and dividends | Yes |
| Overseas income | Yes |
| PIE income (over RWT) | Yes |
| Student allowance | Yes (above a threshold) |
| Benefits (main benefits) | Yes |
| Child support received | Generally excluded |
| KiwiSaver withdrawals | No |
For couples, it is the combined family scheme income of both partners that is assessed.
How Abatement Works in Practice
Consider a family with two children under 16 receiving the maximum Family Tax Credit (FTC) and In-Work Tax Credit (IWTC):
| Income | Annual FTC + IWTC (approx.) | Abatement | Net WFF |
|---|---|---|---|
| $42,700 | $14,000 | $0 | $14,000 |
| $55,000 | $14,000 | $3,321 | $10,679 |
| $70,000 | $14,000 | $7,371 | $6,629 |
| $85,000 | $14,000 | $11,421 | $2,579 |
| $95,000 | $14,000 | $14,121 | $0 (cut off) |
Actual numbers vary significantly based on:
- Number and ages of children
- Which credits you receive (FTC, IWTC, MFTC, Best Start)
- Your exact income
Cut-Out Thresholds (Approximate)
| Family type | Approximate income where WFF reaches zero |
|---|---|
| 1 child | ~$80,000–$90,000 |
| 2 children | ~$90,000–$100,000 |
| 3 children | ~$100,000–$115,000 |
| 4+ children | ~$115,000+ |
These are rough guides. Use IRD’s Working for Families calculator at ird.govt.nz for your exact situation.
Receiving WFF Payments
Weekly or Fortnightly from IRD
If you elect to receive WFF payments in advance (during the year), IRD pays you based on your estimated annual income. The risk: if your actual income is higher than estimated, you receive too much WFF and must repay the excess at year end.
As a Year-End Lump Sum (Recommended if Income Is Uncertain)
If your income varies (self-employment, variable hours), consider not receiving advance payments and instead receiving WFF as a lump-sum refund at year end — after your actual income is confirmed. This avoids any risk of overpayment.
Avoiding WFF Overpayment
The most common WFF issue is receiving overpayments that must be repaid. Causes:
- Income was higher than estimated (overtime, bonus, second job)
- Partner started earning income and IRD wasn’t told
- Rental income wasn’t included in the estimate
How to prevent overpayment:
- Log in to myIR and update your family income estimate whenever income changes
- If in doubt, under-estimate slightly — IRD pays the rest as a year-end refund
- Tell IRD when family composition changes (new child, partner returns to work, child turns 18)
WFF and Self-Employment
Self-employed people must estimate their net profit for the year. This is harder to predict and leads to more end-of-year adjustments. Use your prior year’s profit as a starting point and adjust if the current year is tracking higher or lower.
Self-employment loss that reduces family scheme income must be legitimate business losses — IRD scrutinises artificial losses used to inflate WFF entitlements.
Frequently Asked Questions
My bonus pushed our income over $42,700 in one year. Will our WFF be cut off?
WFF is based on annual income. A bonus increases your annual family income, which increases abatement for that year. It will not permanently affect future years unless your ongoing income remains higher.
Does rental income affect WFF even if we made a loss on the rental?
Net rental income (after deductible expenses) is included in family scheme income. A net rental loss reduces your family scheme income and can increase your WFF entitlement — but only genuine losses, not artificial ones.
We got a WFF overpayment notice. Do we have to pay it all back at once?
IRD will allow instalment arrangements. Contact IRD to arrange a repayment plan you can manage. Interest applies to unpaid amounts but penalties can often be reduced.