Your KiwiSaver PIR — prescribed investor rate — determines the tax rate applied to your investment returns inside your fund. Most members are set to the correct rate automatically, but an incorrect PIR costs you money every year. Here is everything you need to know.
What Is a PIR Rate?
PIR stands for prescribed investor rate. It is the tax rate applied to your KiwiSaver investment income — capital gains, dividends, and interest earned inside the fund. KiwiSaver funds are structured as PIE (Portfolio Investment Entity) funds, which means tax is calculated and deducted inside the fund at your individual PIR, rather than being included in your personal tax return.
There are three PIR rates for KiwiSaver:
| PIR rate | Who it applies to |
|---|---|
| 10.5% | Income ≤ $14,000 in either of the last two income years |
| 17.5% | Income $14,001–$48,000 in either of the last two income years |
| 28% | Income > $48,000 in either of the last two income years, OR non-resident |
The rate is based on your taxable income from the previous two income years — whichever is the most recent year in which your income exceeded a threshold.
How PIR Rates Are Calculated
IRD uses a two-year lookback rule. To find your correct PIR:
- Look at your taxable income for the previous two tax years (31 March year-end)
- Your PIR is based on the lower of the two years — but only if neither year exceeded $48,000 for the 17.5% threshold to apply, or $14,000 for the 10.5% threshold
Simple rule of thumb:
- Earned over $48,000 in either of the last two years → 28%
- Earned $14,001–$48,000 in both of the last two years → 17.5%
- Earned ≤ $14,000 in both of the last two years → 10.5%
Examples
Example 1: Emma earned $62,000 last year and $58,000 the year before. → Both years over $48,000 → PIR = 28%
Example 2: Tom earned $41,000 last year and $38,000 the year before. → Both years between $14,001–$48,000 → PIR = 17.5%
Example 3: Sarah earned $12,000 last year (part-time student) and $11,000 the year before. → Both years ≤ $14,000 → PIR = 10.5%
Example 4: Alex earned $51,000 last year and $43,000 the year before. → One year over $48,000 → PIR = 28%
Why Your PIR Rate Matters
Your PIR is applied to all investment income earned inside your KiwiSaver fund. On a $100,000 balance earning 8% per year:
| PIR rate | Tax on $8,000 return | After-tax return |
|---|---|---|
| 10.5% | $840 | $7,160 |
| 17.5% | $1,400 | $6,600 |
| 28% | $2,240 | $5,760 |
Difference between 10.5% and 28%: $1,400/year on a $100,000 balance. Compounded over 20 years, this adds up to tens of thousands of dollars.
Being on too high a PIR doesn’t get refunded — you lose that excess tax permanently. This is why checking your PIR is important.
Being on too low a PIR: If you set a lower PIR than you’re entitled to, IRD will recalculate the tax owed at the end of the tax year and include the shortfall in your personal tax assessment. You’ll owe the difference — so don’t try to game this.
How to Find Your Current PIR Rate
Via myIR:
- Log in to ird.govt.nz
- Go to “Income tax” and check your income for the last two years
- Use the thresholds above to work out your correct PIR
Via your provider: Your KiwiSaver provider holds your nominated PIR. You can see it in your member portal or annual statement.
Via IRD’s PIR calculator: IRD provides a PIR rate calculator at ird.govt.nz/kiwisaver. Enter your income for the last two years and it will tell you your correct rate.
Common PIR Rate Mistakes
Being stuck on 28% when you should be on 17.5%
This is the most common issue. If you initially set 28% (or were defaulted to it) and your income has since dropped below $48,000 for two consecutive years, you are overpaying tax.
Fix: Update your PIR with your provider. See our how to update your KiwiSaver PIR rate guide.
Being defaulted to 28% without reviewing it
Many providers default new members to 28% — the maximum rate — if no PIR is provided. If you never actively nominated your PIR, you may be on 28% regardless of your actual income.
Fix: Check your provider portal or annual statement. If you’re on 28% and your income is under $48,000, update it immediately.
PIR not reflecting a career change or return to study
If you took time off, changed careers, or returned to study — reducing your income for two consecutive years — your correct PIR may have dropped. Update accordingly.
Confusing PIR with your income tax rate
These are different. Your income tax rate (PAYE) applies to your wages. Your PIR applies only to investment income inside your KiwiSaver (and any other PIE funds). They can be different rates, and the PIR calculation uses a different income threshold scale.
PIR Rate and Other Income Sources
Your PIR calculation uses all taxable income — not just your salary. This includes:
- Wages and salary
- Rental income
- Business income
- Interest (from bank accounts etc.)
- Overseas income
If you have rental property or self-employment income that pushes your total income above a threshold, your PIR needs to reflect that — even if your salary alone would put you in a lower bracket.
What Happens at Age 65?
When you reach 65 and become eligible to withdraw your KiwiSaver balance, PIE tax rules still apply to any funds you leave invested. Your PIR continues to be applied to investment returns inside the fund until you withdraw. If you take a lump sum, there is no additional tax — the PIE tax already paid inside the fund is your final tax obligation on that investment income.
For more on retirement withdrawal options, see our KiwiSaver at 65 guide.
Frequently Asked Questions
What is a PIR rate for KiwiSaver? A PIR (prescribed investor rate) is the tax rate applied to investment income earned inside your KiwiSaver PIE fund. The three rates are 10.5%, 17.5%, and 28%, based on your taxable income in the previous two years.
How do I know which PIR rate I should be on? Check your taxable income for the last two income years. If both years were ≤ $14,000: 10.5%. If both years were $14,001–$48,000: 17.5%. If either year exceeded $48,000: 28%.
What happens if I’m on the wrong PIR rate? If your PIR is too high, you overpay tax and cannot get a refund — the excess is lost. If your PIR is too low, IRD will calculate the shortfall and include it in your year-end tax assessment. It’s always better to be on the correct rate.
Can I choose my own PIR rate? You nominate your PIR when you join a KiwiSaver scheme, and you can update it at any time by contacting your provider. However, you must nominate the correct rate based on your income — you cannot choose a lower rate to reduce tax if you don’t qualify.
Does the PIR rate apply to my entire KiwiSaver balance? No. The PIR applies only to investment income (returns) earned inside the fund each year — not the principal balance. Each year, your provider calculates the taxable income, applies your PIR, and deducts the tax before reporting your after-tax return.
Is KiwiSaver tax different from income tax? Yes. KiwiSaver is a PIE (Portfolio Investment Entity) fund. Investment income inside the fund is taxed at your PIR, not at your marginal income tax rate. KiwiSaver investment returns do not appear on your personal tax return — the tax is handled entirely inside the fund.
What if I don’t provide a PIR rate? Your provider will default you to 28% — the maximum rate. This is IRD’s required default. If 28% is higher than your correct rate, you will overpay tax until you update your PIR.
What to Read Next
- How to Update Your KiwiSaver PIR Rate — step-by-step guide to changing your rate
- KiwiSaver PIE Tax Explained — how the PIE fund structure works
- KiwiSaver Fees Comparison — fees and PIR together determine your real after-tax return
- Best Performing KiwiSaver Funds NZ — performance tables use after-PIR-tax returns
- KiwiSaver at 65 — what happens to PIE tax when you withdraw
- What Is KiwiSaver? — KiwiSaver fundamentals