The Kumars' lawyer, Rachel Scott, said Nalini's offending was down to "naivety" as she was "unaware of the liablities".
She had no previous convictions, and showed "sincere remorse", which her repayments showed.
Judge Courtney noted her early guilty plea and "good judge of character", as well as the effect a jail sentence would have on her family.
IRD lawyer Amanda Bryant told the judge Nalini Kumar had paid the full amount she owed this week.
Although her husband had also been making repayments, he still owed a total of $483,346.
Bryant said Rakesh Kumar's actions were "premeditated" and that he was "aware of his actions", which were significant for this type of offending.
She noted officials from Inland Revenue worked tirelessly on the investigation, which took them a total of four years.
They originally showed interest in Kumar's companies after they returned large income tax losses and low cash earning reports.
He would often pay his employees in cash and would not list them in Inland Revenue Employer schedules.
Addressing Rakesh Kumar, Judge Courtney said the tax system relied heavily on "honesty and integrity" and his behaviour was a bad example to other businesses.
Courtney noted his early guilty pleas and previous good character, and sentenced him to two and half years in prison with no reparation order.
