ACC Levies NZ: Rates, How They Work & What's Covered | QuoteHub
By QuoteHub Editorial Team · Updated 2025-09-30
ACC Levies NZ: What You Pay, How They Work, and What They Cover
If you earn income in New Zealand, you pay ACC levies. They appear on your payslip, in your tax return, and on your vehicle registration. But most Kiwis have only a vague understanding of what these levies actually fund, how much they cost, and where the system falls short.
ACC (the Accident Compensation Corporation) is New Zealand's universal no-fault accident compensation scheme. It covers treatment, rehabilitation, and income replacement for personal injuries caused by accidents. The scheme is funded almost entirely through levies collected from earners, employers, motor vehicle owners, and the government.
This guide explains the three types of ACC levy, how each one is calculated, what they fund, and why the coverage they pay for does not eliminate the need for private insurance.
The three types of ACC levy
ACC collects revenue through three distinct levy streams. Each one funds a different part of the scheme, and each is paid by a different group.
1. Earners' levy
The earners' levy is paid by every person who earns salary, wages, or self-employed income in New Zealand. It funds the Earners' Account, which covers injuries that happen outside of work, such as sports injuries, accidents at home, and motor vehicle injuries to non-earners.
For employees, the earners' levy is deducted from your pay by your employer and passed to Inland Revenue. For self-employed individuals, it is calculated as part of your annual tax return.
The earners' levy is charged as a flat rate per $100 of liable earnings, up to a maximum earnings threshold.
2. Work levy
The work levy is paid by employers and self-employed individuals. It funds the Work Account, which covers injuries that occur in the workplace or are caused by work activities.
Unlike the earners' levy, the work levy is not a flat rate for everyone. It varies by industry classification. Businesses in higher-risk industries (such as forestry, construction, and manufacturing) pay significantly more than those in lower-risk industries (such as office-based professional services).
Each business is assigned a Classification Unit (CU) code based on its primary activity, and the levy rate is set according to the claims history and risk profile of that classification.
3. Motor vehicle levy
The motor vehicle levy is paid by vehicle owners as part of their annual vehicle registration or licensing. It funds the Motor Vehicle Account, which covers injuries resulting from motor vehicle accidents on public roads.
The motor vehicle levy varies by vehicle type. Motorcycles attract a higher levy than passenger cars due to the higher injury rates associated with motorcycle accidents. The levy is collected by Waka Kotahi (NZ Transport Agency) on behalf of ACC.
Current ACC levy rates
ACC levy rates are reviewed and set annually, with changes typically taking effect from 1 April each year.
Earners' levy rates
| Period | Levy rate (per $100 of liable earnings) | Maximum liable earnings | Maximum annual levy |
|---|---|---|---|
| 1 April 2025 to 31 March 2026 | $1.67 | $152,790 | $2,551.59 |
| 1 April 2026 to 31 March 2027 | $1.75 | $156,641 | $2,741.22 |
The earners' levy applies to all liable earnings up to the cap. If you earn $80,000 per year, your earners' levy for 2025/26 would be approximately $1,336 ($80,000 / 100 x $1.67). If you earn $200,000, you still only pay the maximum of $2,551.59 because the levy is capped at the maximum liable earnings threshold.
Work levy rates by industry
Work levy rates vary considerably depending on your industry classification. Here are some indicative rates for the 2025/26 year to illustrate the range.
| Industry classification | Indicative work levy rate (per $100 payroll) |
|---|---|
| Office-based professional services | $0.08 to $0.15 |
| Retail trade | $0.30 to $0.60 |
| Agriculture and farming | $1.50 to $3.00 |
| Building and construction | $1.80 to $3.50 |
| Forestry and logging | $4.00 to $8.00 |
| Transport and warehousing | $1.00 to $2.50 |
These rates are set based on the historical claims experience of each classification unit. Employers in high-risk industries pay more because their workers are statistically more likely to suffer workplace injuries.
Individual businesses may also qualify for experience rating adjustments. If your business has a better-than-average claims history for your classification, you may receive a discount. Conversely, a worse-than-average claims record may result in a loading.
Motor vehicle levy rates
Motor vehicle levies are included in your vehicle registration fee. For the 2025/26 year, indicative rates are:
| Vehicle type | Approximate annual motor vehicle levy |
|---|---|
| Passenger car or van (petrol) | $113.94 |
| Passenger car or van (diesel, RUC-liable) | $113.94 |
| Motorcycle (up to 600cc) | $283.04 |
| Motorcycle (over 600cc) | $283.04 |
| Light commercial vehicle | $113.94 |
Motorcycle levies are significantly higher than car levies because motorcyclists are disproportionately represented in serious road accident claims.
How ACC levies are calculated for the self-employed
Self-employed individuals pay both the earners' levy and the work levy. How these are calculated depends on which ACC cover option you are on.
CoverPlus (standard)
CoverPlus is the default ACC cover for self-employed people. Under CoverPlus, your levies and any weekly compensation are based on your liable earnings from the previous tax year, as reported to Inland Revenue.
This means there is often a lag between your current income and your ACC cover level. If your income has increased significantly since your last tax return, your ACC compensation may be based on a lower figure. Conversely, if your income has dropped, you may be paying levies on earnings you are no longer making.
CoverPlus compensation is paid at 80% of your previous year's liable earnings.
CoverPlus Extra (CPX)
CoverPlus Extra allows you to nominate a specific level of weekly compensation. You choose how much you want to be covered for (within ACC's limits), and your levies are calculated based on that nominated amount rather than your previous year's earnings.
CPX provides more certainty and flexibility. It is particularly useful for self-employed people whose income fluctuates significantly from year to year, or for those who want to ensure their cover reflects their current earning capacity rather than last year's tax return.
The trade-off is that CPX premiums can be higher if you nominate a cover level above what your standard CoverPlus assessment would produce.
What ACC levies fund
The levies you pay fund a comprehensive but strictly defined set of entitlements. When you suffer a personal injury caused by an accident, ACC can provide:
- Medical treatment. GP visits, specialist appointments, physiotherapy, surgery, prescriptions, and diagnostic imaging related to the injury.
- Weekly compensation. Income replacement at 80% of your pre-injury earnings (up to the maximum liable earnings cap) if you are unable to work due to the injury.
- Rehabilitation. Vocational rehabilitation to help you return to work, and social rehabilitation to support your recovery and independence.
- Home and childcare assistance. Help with household tasks and childcare if your injury prevents you from managing these.
- Travel costs. Reimbursement for travel to treatment appointments.
- Lump sum compensation. A one-off payment for permanent impairment, assessed once your condition has stabilised.
- Death benefits. Funeral grants and survivor payments to dependants if a covered injury results in death.
These entitlements apply universally. Every New Zealand resident and visitor is covered, regardless of fault, employment status, or citizenship.
What ACC levies do not fund
This is where the gaps become significant. ACC's mandate is limited to personal injuries caused by accidents. Your levies, no matter how much you pay, do not buy you any cover for:
- Illness and disease. Cancer, heart disease, stroke, diabetes, respiratory conditions, and every other non-accident health condition. If you are diagnosed with cancer and cannot work for six months, ACC pays nothing.
- Degenerative conditions. Arthritis, disc degeneration, osteoporosis, and other conditions that develop with age.
- Mental health conditions. Depression, anxiety, burnout, and other mental health conditions are not covered unless they are a direct consequence of a covered physical injury or sexual violence.
- The 20% income gap. Even for covered injuries, ACC only replaces 80% of your income. The remaining 20% comes out of your savings or goes unpaid.
- Income above the cap. If you earn more than $152,790 (2025/26), ACC does not replace any income above that threshold.
These gaps are not minor. Illness is statistically more likely to cause long-term inability to work than accidents. Cancer, cardiovascular disease, and mental health conditions are among the leading causes of extended work absence in New Zealand, and ACC covers none of them.
For a detailed breakdown of what falls outside ACC's scope, see our guide on what ACC does not cover.
ACC cover vs private insurance: side-by-side comparison
The following table highlights the key differences between what your ACC levies buy and what private insurance provides.
| Category | ACC (funded by levies) | Private insurance |
|---|---|---|
| Trigger | Accidents only | Accidents and illness |
| Income replacement rate | 80% of pre-injury earnings | Typically 75% (income protection), no distinction between accident and illness |
| Income cap | $152,790 liable earnings (2025/26) | No cap on most policies; based on your actual income |
| Illness cover | Not covered | Fully covered by income protection and trauma insurance |
| Mental health cover | Only if linked to a covered physical injury or sexual violence | Covered by most income protection policies (subject to terms) |
| Lump sum on serious diagnosis | Only for permanent impairment from accidents | Trauma insurance pays a lump sum on diagnosis of specified conditions including cancer, heart attack, and stroke |
| Death benefit | Funeral grant and modest survivor payments | Life insurance pays your chosen sum insured to your beneficiaries |
| Medical treatment | Accident-related treatment through public and approved providers | Health insurance provides private hospital access, choice of specialist, and shorter wait times for any condition |
| Choice of provider | Limited; ACC directs you to approved providers | Full choice of specialists and private hospitals |
| Cost | Compulsory levies (earners' levy: $1.67 per $100 in 2025/26) | Voluntary premiums based on age, health, occupation, and cover level |
The gap is clear. ACC is excellent for what it covers, but it only covers accidents. Private insurance addresses everything else.
Why ACC levies alone are not enough
Paying ACC levies gives you a strong safety net for accidents. But accidents are only one category of risk. The most common reasons people cannot work for extended periods are illnesses, not injuries.
Consider a simple scenario. You earn $100,000 per year, you have a mortgage of $500,000, and your household expenses are $6,000 per month.
If you break your leg in a workplace accident, ACC covers you. You receive roughly $80,000 per year (80% of your income) while you recover. Treatment is funded. You return to work in a few months.
If you are diagnosed with bowel cancer and need six months of treatment, ACC pays nothing. Your income drops to zero. Your mortgage, your bills, and your family's living costs do not pause. Without private insurance, you would need to draw on savings, access KiwiSaver hardship provisions, rely on family, or take on debt.
Income protection insurance fills this gap directly. It pays a monthly benefit (typically 75% of your income) if you cannot work due to any cause, whether accident or illness. Some policies also integrate with ACC, providing a top-up for accident-related claims and full replacement for illness-related claims.
Trauma insurance provides a lump sum on diagnosis of a specified serious condition, giving you immediate financial flexibility when you need it most.
Get a free insurance check
ACC levies give you a foundation, but they leave significant gaps. The best way to understand your actual exposure is to have a qualified adviser review your situation.
QuoteHub connects you with authorised financial advisers who can assess your ACC cover, identify the gaps, and recommend private insurance options tailored to your circumstances. It is free, takes a few minutes, and there is no obligation.
Frequently Asked Questions
How much is the ACC earners' levy in 2026?
For the year 1 April 2026 to 31 March 2027, the ACC earners' levy rate is $1.75 per $100 of liable earnings, up to maximum liable earnings of $156,641. The maximum annual earners' levy for this period is $2,741.22.
Do employees pay ACC levies?
Yes. Employees pay the earners' levy, which is deducted from their wages by their employer and passed to Inland Revenue. Employees do not directly pay the work levy; that is the employer's responsibility. However, both the earners' levy and the work levy are ultimately part of the cost of employing someone in New Zealand.
How are ACC work levies calculated for my business?
Your work levy is determined by your industry classification (Classification Unit code) and the total liable earnings of your employees. Each CU code has a base levy rate per $100 of payroll. Businesses with better-than-average claims histories may receive experience rating discounts, while those with worse records may face loadings.
What is the difference between CoverPlus and CoverPlus Extra?
CoverPlus is the default ACC cover for self-employed people. It bases your levies and compensation on your previous year's liable earnings as reported to Inland Revenue. CoverPlus Extra (CPX) allows you to nominate a specific weekly compensation amount, giving you more control over your cover level. CPX is useful if your income fluctuates or if you want your cover to reflect your current earning capacity.
Can I reduce my ACC levies?
Employers can reduce their work levies through ACC's experience rating programme, workplace safety accreditation programmes, and by managing claims effectively. For the earners' levy, there is no way to reduce the rate as it is a flat percentage applied to all earners. The only way to reduce your total earners' levy is to earn less, which is not practical advice.
Does paying ACC levies mean I do not need income protection?
No. ACC levies fund accident cover only. If you cannot work due to illness, ACC pays nothing. Income protection insurance covers both accidents and illnesses, making it the most important complement to ACC cover. See our ACC vs private insurance comparison for a detailed breakdown.
Are ACC levies tax deductible?
For self-employed individuals, ACC levies paid on business income are generally tax deductible as a business expense. For employees, the earners' levy is deducted before tax is calculated on your pay, so it effectively reduces your taxable income. The motor vehicle levy paid as part of vehicle registration is not deductible for personal vehicles but may be deductible for vehicles used for business purposes.
Take the next step
If you are unsure whether your current insurance setup adequately fills the gaps that ACC leaves, it is worth getting a professional opinion. QuoteHub's free insurance check takes a few minutes and gives you a clear picture of where you stand.
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References
- Financial Markets Authority (FMA) , Insurance guidance
- ACC New Zealand
- Sorted.org.nz , Insurance guides
- Insurance & Financial Services Ombudsman (IFSO)
- MoneyHub NZ , Insurance resources
- Diabetes New Zealand
- Cancer Society of New Zealand
- Heart Foundation NZ
- Accident Compensation Corporation. Levy rates and thresholds, 2025/26 and 2026/27.
- Accident Compensation Corporation. CoverPlus and CoverPlus Extra for self-employed, 2025.
- Accident Compensation Corporation. What we cover, 2025.
- Accident Compensation Corporation. Classification unit and levy rate tables, 2025/26.
- Waka Kotahi NZ Transport Agency. Motor vehicle registration fees and ACC levies, 2025/26.
- Inland Revenue. ACC earners' levy deductions for employers, 2025.
Disclaimer
The information in this article is general in nature and does not constitute personalised financial advice. Insurance needs vary depending on your individual circumstances, health, and financial situation. We recommend consulting an authorised financial adviser before making any insurance decisions. QuoteHub is operated under FSP 712931 and is authorised to provide financial advice in New Zealand.
Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance.