The German national had reportedly applied for nearly three times as much, to cover his costs including luxuries such as a butler and nannies, when he was freed on bail last month.
But the High Court in Auckland ruled Dotcom, who US authorities allege earned $42 million from his file-sharing websites in 2010 alone, would have to survive on NZ$60,000 a month, Fairfax Media reported.
It also gave the Internet tycoon, a keen car enthusiast, access to a 2011 Mercedes Benz, the New Zealand Herald reported.
The 38-year-old's assets were frozen after New Zealand police, cooperating with a major US probe, raided his sprawling Auckland mansion on January 20, seizing artworks and luxury cars including a pink Cadillac.
The US Justice Department and FBI allege Megaupload and related sites netted more than $175 million in criminal proceeds and cost copyright owners over $500 million by offering pirated copies of movies, TV shows and other content.
Megaupload was founded in 2005 but shut down in January after the Auckland raid.
A US application for Dotcom's extradition is expected to be heard on August 20. US authorities have said they will seek the maximum penalty of 20 years in jail if he is brought before an American court.
Dotcom, who legally changed his name from Kim Schmitz, has denied any wrongdoing and vowed to fight extradition, labelling the case against him "misleading and malicious".