PIR explained: your KiwiSaver and managed fund tax rate in NZ

Your KiwiSaver scheme or managed fund pays tax on your share of its earnings at your prescribed investor rate (PIR). For resident individuals it is 10.5%, 17.5% or 28%. Your rate for 2026/27 depends on your income in the two years before: 2024/25 and 2025/26. If you have never told your provider a PIR, it uses 28%. Pick a rate that is too high or too low and Inland Revenue squares up the difference at year end.

What a PIR is and why it matters

Most KiwiSaver schemes and many managed funds are portfolio investment entities, or PIEs. Instead of you paying tax on your share of the fund's earnings, the fund works it out and pays it for you, using the rate you give it. That rate is your PIR.

For resident individuals the rates are 10.5%, 17.5% and 28%. A 0% rate exists only for certain zero-rate PIE cases, not for ordinary individual investors.

When your PIR is right, PIE income stays out of your taxable income. It is not added to your salary, it does not show up in your tax bracket, and there is nothing to do at year end. That is the main reason to get it right: the fund's tax becomes the final tax.

When your PIR is wrong, Inland Revenue's end-of-year PIE calculation works out the correct rate for the full year and adjusts your income tax assessment up or down.

The PIR test and thresholds

The test, from Inland Revenue's IR861 PIR fact sheet (March 2026), looks at two figures for a year: your taxable income, which leaves out PIE income, and your taxable income plus PIE income, less any PIE loss.

Both conditions on a row must be met. You start at the top: if you pass the 10.5% test you use 10.5%; if not, try the 17.5% test; otherwise you are on 28%.

Two rules about losses: a PIE loss does not reduce your taxable income, and a PIE loss cannot be more than your PIE income.

These thresholds took effect from 1 April 2025, in line with the income tax bracket changes, so they apply for the 2025/26 and 2026/27 PIR years.

The two-year look-back

You run the test separately for each of the two income years before the year you are choosing a PIR for. If either year passes a test, you can use that rate. When the two years give different answers, you take the lower rate.

For the 2026/27 PIR year, which ends on 31 March 2027, the two years are the ones that ended on 31 March 2025 and 31 March 2026, according to Inland Revenue's Find your PIR page.

Your income in the current year is not part of the test. A pay rise in 2026/27 does not change your 2026/27 PIR. It will matter when 2026/27 becomes one of your two look-back years.

The look-back is generous on the way up. If your income jumped last year but the year before still qualifies for 17.5%, you keep 17.5% for now. It works the other way too: if your income has fallen, the year with the lower income can bring your rate down straight away.

Working out your PIR: examples

First, Inland Revenue's own examples from its IR860 PIE guide. They are for the 2025/26 PIR year, so the look-back years are 2023/24 and 2024/25. This site's engine gives the same answer for each.

In Example 1, neither year passes the 10.5% test, but both pass the 17.5% test: $35,000 in 2023/24, and $37,000 plus $35,000 of PIE income, or $72,000, in 2024/25. So 17.5% it is. Example 2 earned well in 2024/25, but $13,100 in 2023/24 passes the 10.5% test, and either year is enough. Example 4 is over $53,500 in both years, so no lower rate is available.

Now some 2026/27 cases, run through this site's engine:

Aria's totals of $60,000 and $64,000 are both under $78,100, and her taxable income is under $53,500, so 17.5%. Ben was a student in 2024/25; that year alone gets him 10.5%. Chloe is the case people miss: her taxable income dropped to $50,000 in 2025/26, but a big fund return took her total to $80,000, over the $78,100 limit, so she stays on 28%. Dev's income jumped in 2025/26, but 2024/25 still qualifies him for 17.5% this year.

The 28% default

If you do not give your provider a PIR, or do not give it your IRD number, it must use 28%. Many people are on 28% simply because they never chose, not because it is their rate.

The default is also the right rate for plenty of people. If your taxable income was over $53,500 in both look-back years, or your total with PIE income was over $78,100 in both, 28% is correct and you do not need to change anything.

Check your rate when you join a scheme, when you switch providers, and each year around April when the look-back years move on. For 2027/28 the look-back years will be 2025/26 and 2026/27.

Checking your PIR, step by step

1. Find your taxable income for 2024/25 and 2025/26. It is on your income tax assessment or IR3 for each year, and it does not include PIE income.
2. Find your PIE income for the same two years. Your KiwiSaver and fund statements show it. Take off any PIE loss, but no more than your PIE income.
3. Test each year on its own. Is taxable income $15,600 or less and the total $53,500 or less? Then 10.5%. If not, is taxable income $53,500 or less and the total $78,100 or less? Then 17.5%.
4. Take the lower result from the two years. If neither year passes, your rate is 28%.
5. Tell every provider. Each KiwiSaver scheme or fund deducts at the rate it holds for you.

If your PIR is too low or too high: the square-up

At year end Inland Revenue works out the correct PIR for the full year. It multiplies your PIE income by that rate, compares the answer with the PIE tax your fund deducted, and adjusts your income tax assessment:

• PIR too low: the shortfall is a PIE debit, added to the tax on your taxable income. You pay it with any other tax due.
• PIR too high: the excess is a PIE credit. It reduces any tax you owe, and any remainder is refunded.

Here is how it looks on $2,000 of PIE income in 2026/27, worked with Inland Revenue's method:

Inland Revenue's own examples

McKenzie (2023/24): PIE income of $1,345 with $376.60 of PIE tax deducted at 28%. Her correct PIR was 17.5%, so the correct PIE tax was $235.38 and she had a PIE credit of $141.22. She also had an income tax debt of $70.23, which the credit cleared, leaving a refund of $70.99.

Cherise: PIE income of $575 with $60.38 deducted at 10.5%. Her correct rate was 28%, so the correct PIE tax was $161.00, a PIE debt of $100.62. Added to her income tax bill of $2,300, she had $2,400.62 to pay. IRD does not tie this example to a year; the method is the same for 2026/27.

Gabriela: a PIE loss of $3,120, for which she received a tax credit of $873.60 at 28%. At her correct rate of 17.5% the credit should have been $546.00, so she had a PIE debt of $327.60. A rate that is too high on a loss works against you.

KiwiSaver, Working for Families and provisional tax

A few knock-on effects to keep in mind:

• Working for Families and student loans. Locked-in PIE income, such as KiwiSaver, is left out when working out income for Working for Families and student loan repayments. PIE income that is not locked in has to be added, using form IR215.
• Provisional tax. Inland Revenue says that if your residual income tax, including any PIE debt, is more than $5,000, you will have to pay provisional tax for the following year. A large PIE debit from a rate that was far too low can contribute to that. Our provisional tax guide explains what follows.
• Your refund or bill. A PIE credit or debit appears in your year-end assessment alongside everything else. Our refund or bill guide shows how the pieces fit, and the investment income tax calculator suggests a PIR from your two look-back years.

To change your PIR, tell your KiwiSaver provider or fund manager. If you are in more than one fund, each provider needs your rate.

A rate that is too high is not as safe as it may look. A credit comes back, but only after the year ends; and on a PIE loss, as Gabriela's example shows, a too-high rate gives you a bigger credit now and a debt to repay later. The cleanest result comes from the rate the test gives you.

Questions people ask

What PIR should I use for 2026/27?

Run the test on your 2024/25 and 2025/26 income. You can use 10.5% or 17.5% if either year meets that rate's two thresholds; otherwise 28%.

What happens if I do not choose a PIR?

Your provider uses the 28% default. If your correct rate is lower, Inland Revenue's year-end square-up gives you a PIE credit for the difference.

Does my income this year change my PIR?

No. Only the two income years before the PIR year count. Your 2026/27 income will count when you work out your PIR for 2027/28 and 2028/29.

Is PIE income added to my taxable income?

Not when your PIR is right. It is taxed in the fund at your PIR and kept out of your taxable income. If your PIR is wrong, only the difference in PIE tax is squared up.