One of the most common questions about KiwiSaver is whether withdrawals are taxed when you turn 65. The short answer: no — KiwiSaver withdrawals at 65 are not taxed. But KiwiSaver is taxed during the accumulation phase, in a specific way. Here’s the full picture.
Tax During the Accumulation Phase
While your money is in KiwiSaver, the investment returns (earnings from the fund) are taxed through the PIE (Portfolio Investment Entity) regime.
Each KiwiSaver fund is a PIE fund. PIE funds pay tax on earnings at your Prescribed Investor Rate (PIR) rather than your marginal income tax rate.
PIR rates in 2026:
| Annual taxable income | PIR |
|---|---|
| Up to $14,000 | 10.5% |
| $14,001–$48,000 | 17.5% |
| Over $48,000 | 28% |
Key point: 28% is the maximum PIR. Even if your income puts you in the 33% or 39% marginal tax bracket, your KiwiSaver earnings are capped at 28% PIE tax. This is one of KiwiSaver’s genuine tax advantages for higher earners.
Your own contributions are made from after-tax income — you’ve already paid PAYE on your salary before the contribution is deducted.
Tax at Withdrawal — Age 65
When you withdraw your KiwiSaver balance at 65 (or after reaching the qualifying KiwiSaver age), the withdrawal itself is not taxable income.
You will not:
- Pay income tax on the withdrawal amount
- Need to declare the KiwiSaver withdrawal on an IR3 tax return
- Have tax withheld by your provider
The tax has already been paid during the accumulation phase through the PIE regime. Withdrawing the balance is simply accessing money that has been building up in a tax-paid structure.
What About Regular Drawdown Payments?
If you set up regular payments from your KiwiSaver at retirement — say, $1,500/month paid to your bank account — these payments are also not taxable income. You don’t declare them to IRD as income.
This is different from, for example, withdrawing from a non-PIE managed fund or selling shares, where capital gains and dividends may have different tax treatment.
Is NZ Super Taxed?
Yes — and this is a common source of confusion. NZ Super is taxable income, even though KiwiSaver withdrawals are not.
If you receive NZ Super at 65 and also draw down KiwiSaver, you pay income tax on the NZ Super, but not on the KiwiSaver portion.
For most retirees, NZ Super is taxed at the M tax code. If you have significant other income (rental properties, part-time work, etc.), your total income will determine your marginal rate on that other income — but KiwiSaver withdrawals don’t add to this.
PIE Tax During Drawdown
While your KiwiSaver balance remains invested (even after 65, even during drawdown), the fund’s ongoing returns continue to be taxed at your PIR through the PIE regime. This continues until your balance reaches zero.
After age 65, your PIR may change — if your total taxable income is lower (e.g., just NZ Super at ~$27,000/year), you may qualify for a lower PIR (17.5% instead of 28%). It’s worth updating your PIR with your provider when you retire, as overpaying PIR is final — you cannot reclaim it.
See how to update your KiwiSaver PIR rate for the process.
ESCT — Tax on Employer Contributions
During your working life, your employer’s KiwiSaver contributions are subject to Employer Superannuation Contribution Tax (ESCT), deducted at source before the net amount is deposited into your account.
ESCT rates mirror income tax rates:
| Gross income + employer contribution | ESCT rate |
|---|---|
| Up to $16,800 | 10.5% |
| $16,801–$57,600 | 17.5% |
| $57,601–$84,000 | 30% |
| Over $84,000 | 33% |
This means you don’t pay income tax on employer contributions at withdrawal — that tax was already taken at source.
Member Tax Credit — Is It Taxed?
The MTC ($521.43/year maximum from IRD) is not taxable income. It’s a government contribution added directly to your KiwiSaver account. You don’t declare it as income, and it’s not taxed at withdrawal.
Exception: if you withdraw KiwiSaver on permanent departure from NZ (leaving the country for good), the MTC you’ve received is clawed back — IRD takes back the MTC portion of your balance before the remainder is paid out.
Summary
| KiwiSaver event | Taxed? |
|---|---|
| Your contributions (from salary) | No — made from after-tax income |
| Employer contributions | Yes — ESCT deducted at source before deposit |
| Investment returns during accumulation | Yes — PIE tax at your PIR (max 28%) |
| Member Tax Credit | No |
| Withdrawal at age 65 | No |
| Regular drawdown payments post-65 | No |
| Ongoing returns during drawdown | Yes — PIE tax continues at PIR |