Updated Apr 2025 2025–26 NZ IRD

The Plain-English PIR Guide

What is a Prescribed
Investor Rate?

Most New Zealanders set their PIR once when they join KiwiSaver and never look at it again. A single income change can mean you're overpaying — or underpaying — for years without knowing.

Updated April 2025 2025–26 tax year ~10 min read
⚡ New thresholds from 1 April 2025: $15,600 / $53,500 / $78,100. Many investors on 28% now qualify for 17.5%.

What is a PIR?

PIR stands for Prescribed Investor Rate. It's the tax rate applied to income you earn from KiwiSaver and other multi-rate PIE (Portfolio Investment Entity) funds — managed funds that calculate and pay tax on your behalf at your individual rate.

Unlike ordinary income tax, PIE tax is handled by your fund manager, not by you. Every year your fund attributes income to you and pays IRD tax at your PIR. You don't declare this income in your tax return — it's a final tax. Your only responsibility is making sure your fund has the right rate on file.

Your PIR can be 10.5%, 17.5%, or 28%, based on your income over the prior two tax years. The crucial detail: the maximum PIR is 28%, regardless of your marginal income tax rate. Someone earning $200,000 and paying 39% income tax on their salary still only pays 28% on their KiwiSaver returns.

💡
Why the 28% cap is valuable
A high earner on the 39% marginal rate pays 39% on salary, 33% on bank interest, but only 28% on KiwiSaver returns. On a $150,000 KiwiSaver balance earning 7% ($10,500), the cap saves $1,155 per year in tax compared to being taxed at 39%. Over a 20-year career, that difference compounds significantly.

PIE funds include KiwiSaver schemes (Simplicity, Kernel, Milford, Fisher Funds, Generate, Booster, SuperLife and bank schemes), multi-rate PIE managed funds, and PIE term deposits offered by banks. Standard term deposits are not PIE products — they're taxed at your marginal rate via RWT.

The three PIR rates

For NZ tax resident individuals who have provided their IRD number, there are three rates. The thresholds below are current from 1 April 2025:

10.5%
Low rate — both prior years at or below $15,600
Your combined taxable income and PIE income was $15,600 or less in both of the prior two tax years. Most students, part-time workers, retirees on low income, and children qualify.
17.5%
Mid rate — both prior years at or below $53,500
Your combined income was $53,500 or less in both prior years, and neither year exceeded $78,100 when PIE income is added. Applies to a wide range of salary earners and part-time workers.
28%
High rate — either prior year exceeded $53,500
Your income exceeded $53,500 in either prior year, or exceeded $78,100 including PIE income in either year. Also the default rate if you've never provided a PIR to your fund.
⚠️
The default trap — most people are overpaying
If you joined KiwiSaver and never set a PIR, or never updated it after your income changed, your fund is using 28%. IRD requires funds to apply 28% when no PIR is provided. Many New Zealanders earning under $53,500 are on 28% right now and have been for years — and their providers won't fix it without being told.

The two-year lookback rule

Your PIR is not based on your current year income. It looks backwards at the two most recently completed tax years. Your PIR for 2025–26 (ending 31 March 2026) is based on income earned in:

You use whichever of those two years gives you the lower PIR. You don't need both years to be below a threshold — one year is enough to unlock a lower rate. This is the detail most people miss, and it works strongly in favour of anyone who had a lower-income year recently.

📌
One good year unlocks a lower rate
If you earned $70,000 in 2023–24 but only $48,000 in 2024–25 (parental leave, career break, part-time year), your 2024–25 income is below $53,500 — so your PIR for 2025–26 is 17.5%, not 28%. The lower year wins.

There is one exception to the lower-year rule. Even if your base taxable income is below $53,500 in both years, if your taxable income plus PIE income exceeded $78,100 in either year, your PIR is 28%. This upper check prevents high-PIE-income investors from accessing the mid rate. Add your attributed PIE income (from your annual PIE tax certificate) to your taxable income when running this check.

The April 2025 threshold changes

From 1 April 2025, all PIR income thresholds increased as part of the broader personal tax changes announced in Budget 2024. This is the first change to PIR thresholds in many years and it directly benefits anyone whose income sits between the old and new thresholds.

PIR Old threshold (to 31 Mar 2025) New threshold (from 1 Apr 2025) Increase
10.5% ≤ $14,000 ≤ $15,600 +$1,600
17.5% ≤ $48,000 ≤ $53,500 +$5,500
28% upper check > $70,000 incl. PIE > $78,100 incl. PIE +$8,100

The $5,500 rise in the 17.5% threshold is the most impactful change for the most people. Anyone earning between $48,001 and $53,500 who was previously locked into 28% may now qualify for 17.5%. Your fund will not update your PIR automatically — you need to check and notify them yourself.

⭐
Most likely to benefit from the April 2025 change
If your income was between $48,001 and $53,500 in either of the last two tax years and you're currently on 28%, check the new threshold immediately. You may now qualify for 17.5%. On a $50,000 KiwiSaver balance earning 6%, that's a saving of around $255 per year — every year, compounding.

What income counts toward your PIR?

When calculating your PIR, you need your total income for each prior year — not just your salary. Include all of the following:

Do not include: most government benefits (Working for Families, main benefit, NZ Superannuation above the income threshold), child support received, or income exempt under transitional residency rules.

Your annual PIE income is shown on the tax certificate your fund issues after 31 March each year. You can also find it in myIR — IRD receives this data directly from your fund. You need to add this PIE income to your taxable income when checking the upper $78,100 threshold.

🌏
New migrants: include overseas income
If you've recently become an NZ tax resident, you must include income from overseas sources for each year — even if you weren't a NZ resident when it was earned. This means your PIR may be 28% in your first years even if your NZ income is modest. Special rules may apply; visit IRD's PIR tool for guidance specific to new residents.

What happens if you use the wrong rate?

If your PIR is too high — you're overpaying

Using a PIR higher than required is allowed and carries no penalty. At year end, IRD calculates a PIE tax credit for the difference between what you paid and what you should have paid. This credit is first applied against any income tax you owe; if the credit exceeds your income tax bill, the remainder is refunded to you in cash.

The problem is timing and compounding. Tax deducted from your KiwiSaver throughout the year is money that isn't growing in your fund. The refund arrives months later with no interest — you've effectively given IRD an interest-free loan, and lost compounding returns on that money for the whole year.

If your PIR is too low — you have a debt

Using a PIR lower than required means a tax bill at year end. IRD calculates the shortfall as a PIE debt and adds it to your income tax assessment. There is no grace period and no waiver. If you believe your PIR may be too low, update it immediately to stop the debt growing through the year.

Worked example — cost of the wrong PIR
Aroha earns $50,000. Her fund uses 28%. Her correct rate from April 2025 is 17.5%.
KiwiSaver balance$65,000
Annual return (7%)$4,550
Tax at 28% (current PIR)$1,274
Tax at 17.5% (correct PIR)$796
Annual overpayment$478 refunded at year end
Lost compound growth over 10 yrs~$5,400 foregone

The real cost isn't just the annual tax difference — it's the growth that never happened on the money deducted throughout the year. Correcting your PIR today stops that clock immediately.

How to check and update your PIR

Updating with your provider

Simplicity
Log in → Account Settings → Tax Details → PIR
Kernel
Log in → Profile → Tax Settings → PIR
Milford
Log in → My Details → Tax Information → PIR rate
Fisher Funds
Log in → My Profile → Tax Rate → update PIR
Generate
Log in → Settings → Tax Details → PIR
BNZ KiwiSaver
Internet Banking → KiwiSaver → Manage → Tax rate
ANZ KiwiSaver
goMoney → KiwiSaver → Details → PIR
ASB KiwiSaver
ASB Online → KiwiSaver → My Details → Tax rate

Worked examples

Example 1: The April 2025 threshold change

Ben earns $51,000 salary. His 2023–24 income was $49,500 and his 2024–25 income was $51,000. Under the old $48,000 threshold, both years pushed him into 28%. Under the new $53,500 threshold, both years are below — so his correct PIR for 2025–26 is now 17.5%. His fund is still using 28% because he hasn't told them yet.

Example — same income, lower rate from April 2025
Ben: qualifies for 17.5% from April 2025 despite no income change
2023–24 income$49,500
2024–25 income$51,000
PIR under old thresholds28% (both years > $48k)
Correct PIR from April 202517.5% (both years < $53.5k)
Annual KiwiSaver return (est.)$3,200
Annual tax saving$336/yr

Example 2: The lower-year rule saves money

Sarah earned $68,000 in 2023–24 (full-time). She went part-time in 2024–25 and earned $42,000. Her 2024–25 income is below $53,500 — so despite the high prior year, her PIR for 2025–26 is 17.5%, not 28%.

Example — lower-year rule
Sarah: part-time year unlocks a lower PIR
2023–24 (full-time)$68,000 → suggests 28%
2024–25 (part-time)$42,000 → suggests 17.5%
Correct PIR — lower year wins17.5%

Example 3: Children's KiwiSaver

Mia is 12 and has a KiwiSaver account opened by her parents when she was a toddler. She has no income. Her correct PIR is 10.5%. Her fund is almost certainly using 28% because no one ever set it. Her parents log in, update to 10.5%, and the tax on her annual fund returns drops immediately — compounding in her favour for the next five-plus decades.

Frequently asked questions

Use the lower of your two prior years — whichever year gives you the lower rate. If in 2023–24 you earned $58,000 (suggesting 28%) and in 2024–25 you earned $46,000 (suggesting 17.5%), your PIR is 17.5% because the lower year qualifies. If both years suggest the same rate, that's your rate. Check each April as your two-year lookback window rolls forward with a new year.
Yes — your PIR is the same rate for all your PIE investments, but you need to notify each provider separately. Each fund uses whatever rate they have on file for you. If you also have a PIE term deposit with your bank, update that too. IRD reconciles each fund independently at year end, so having the wrong rate with any one provider will create a credit or debt for that fund.
Yes — you're allowed to use a higher PIR than required. IRD will credit any overpayment at year end and refund any excess. Some investors deliberately stay on 28% to avoid the risk of underpaying. However there's no financial advantage — you're giving IRD an interest-free loan and forgoing compound growth on the excess throughout the year. Setting the correct rate is always the better outcome.
PIE income is a final tax — you don't declare it in your IR3 return and it doesn't affect your income tax rate. IRD receives the data directly from your fund and handles the year-end reconciliation automatically. If your PIR was correct, nothing changes at year end. If it was too high, IRD issues a credit and potential refund. If it was too low, IRD adds the shortfall to your income tax bill. No additional filing is required from you.
No — the government's annual member tax credit (currently up to $521.43 per year) is not affected by your PIR. It's based solely on how much you contribute to KiwiSaver during the year, not the tax rate applied to your returns. Your PIR only affects the tax deducted from the investment earnings within the fund.
No — they're different products with different tax treatment. A regular bank term deposit is taxed at your marginal rate via Resident Withholding Tax (RWT) — if you're on 33%, you pay 33% on the interest. A PIE term deposit (offered by most major banks alongside their regular term deposits) uses the PIE structure and caps your tax at 28%. For investors on 30%, 33% or 39% marginal rates, a PIE term deposit often produces a better after-tax return even if the headline interest rate is marginally lower. Always compare after-tax returns, not headline rates.
Your marginal tax rate is applied to your ordinary income — salary, self-employment, rental, interest — through the income tax system, with rates of 10.5%, 17.5%, 30%, 33%, and 39%. Your PIR is a separate rate that only applies to income earned inside PIE fund structures like KiwiSaver. The key difference: your marginal rate goes up to 39%, but your PIR is capped at 28%. This means PIE income is always taxed at the same or lower rate than your ordinary income — never higher.

Disclaimer: This guide is for educational purposes only and does not constitute financial or tax advice. PIR rules depend on your individual circumstances. Always verify your correct PIR using IRD's official tool or consult a qualified NZ tax adviser before notifying your provider. Not affiliated with Inland Revenue.

About this guide

This guide is written for New Zealand tax residents invested in KiwiSaver or multi-rate PIE funds including Simplicity, Kernel, Milford, Fisher Funds, Generate, Booster, SuperLife, and bank KiwiSaver and PIE products. Content is based on IRD IR861 and reflects the April 2025 threshold changes effective for the 2025–26 tax year (1 April 2025 – 31 March 2026).

Disclaimer

This guide is for general educational purposes only and does not constitute financial or tax advice. PIR rules depend on your individual circumstances. Always verify your correct PIR using IRD's official tool or consult a qualified NZ tax adviser before notifying your provider. Not affiliated with or endorsed by Inland Revenue.