Prescribed Investor Rate (PIR)

The Prescribed Investor Rate (PIR) is the tax rate applied to investment income earned within a Portfolio Investment Entity (PIE), such as KiwiSaver funds, managed funds, and unit trusts. PIR rates are based on your income level and are capped at 28%, which can be more favorable than being taxed at your marginal income tax rate (which can be as high as 39%).

There are three PIR rates: 10.5%, 17.5%, and 28%. Your correct PIR depends on your taxable income over the previous two years. For FY 2025-26, if your income was $14,000 or less in both years, use 10.5%; if $14,001-$48,000, use 17.5%; if over $48,000, use 28%. It's your responsibility to choose the correct PIR, as choosing too low a rate can result in a tax bill at year-end.

Real-World Example If James earns $55,000 annually and has a KiwiSaver balance earning $2,000 in investment returns, his PIR rate is 28%. His KiwiSaver provider deducts $560 in tax (28% of $2,000) automatically. If James were taxed at his marginal rate of 30%, he'd pay $600, so the PIR system saves him $40.