PIR Explained: How to Work Out Your Prescribed Investor Rate

Q: How do I work out my PIR?

Your PIR is based on your income in the two income years before the year the rate applies to. You qualify for a rate if you meet the test in either of those two years (as at July 2026, thresholds updated 1 April 2025): - 10.5% — your taxable income (excluding PIE income) was $15,600 or less, AND your taxable income plus PIE income was $53,500 or less - 17.5% — your taxable income (excluding PIE income) was $53,500 or less, AND your taxable income plus PIE income was $78,100 or less - 28% — in all other cases Because the test looks back two years and you only need to qualify in one of them, your PIR can lag your circumstances. If your income dropped — you retired, took parental leave, went part-time — you may qualify for a lower PIR sooner than you expect. Review your PIR every year, ideally around the start of the tax year in April, and whenever your income changes materially. You update it directly with your KiwiSaver or fund provider.

Q: What happens if my PIR is wrong?

Two directions, two outcomes: - PIR too low: the fund under-taxes your investment income. Inland Revenue now includes PIE income in your end-of-year income tax assessment, so the shortfall is calculated automatically and you will have tax to pay. - PIR too high: you have been over-taxed during the year. Under rules in place since 2020, Inland Revenue's year-end calculation also works in your favour here — overpaid PIE tax is applied as a credit or refunded in your assessment. Before 2020 that money was simply lost, which is why older articles still say an over-high PIR is unrecoverable. If you never provide a PIR or IRD number at all, the fund must use the 28% default rate — the highest individual rate. New PIE investors have 6 weeks to supply an IRD number before the account must be closed. So the worst self-inflicted outcome is doing nothing while qualifying for 10.5% or 17.5%.

What is a PIR and why does it matter?

If you have KiwiSaver or any managed fund that is a portfolio investment entity (PIE), the fund pays tax on your investment earnings at your prescribed investor rate (PIR) — not at your normal income tax rate. Getting your PIR right means you pay the correct amount of tax; getting it wrong means either overpaying all year or facing a bill later.

This guide covers the current rules as at July 2026, verified against Inland Revenue's PIR guidance and the IR861 factsheet.

What is a prescribed investor rate (PIR)?

A PIR is the tax rate a multi-rate PIE — which includes almost every KiwiSaver fund and most NZ managed funds — uses to calculate tax on the income it earns for you. For New Zealand resident individuals there are three rates: 10.5%, 17.5% and 28%.

The key feature: the top PIR is 28%, even if your marginal income tax rate is 33% or 39%. That cap is a deliberate design feature of PIEs and is one of the main reasons higher earners often hold investments through PIE funds rather than directly. Our PIE tax guide covers this in depth.

How do I work out my PIR?

Your PIR is based on your income in the two income years before the year the rate applies to. You qualify for a rate if you meet the test in either of those two years (as at July 2026, thresholds updated 1 April 2025):

10.5% — your taxable income (excluding PIE income) was $15,600 or less, AND your taxable income plus PIE income was $53,500 or less
17.5% — your taxable income (excluding PIE income) was $53,500 or less, AND your taxable income plus PIE income was $78,100 or less
28% — in all other cases

Because the test looks back two years and you only need to qualify in one of them, your PIR can lag your circumstances. If your income dropped — you retired, took parental leave, went part-time — you may qualify for a lower PIR sooner than you expect. Review your PIR every year, ideally around the start of the tax year in April, and whenever your income changes materially. You update it directly with your KiwiSaver or fund provider.

What happens if my PIR is wrong?

Two directions, two outcomes:

PIR too low: the fund under-taxes your investment income. Inland Revenue now includes PIE income in your end-of-year income tax assessment, so the shortfall is calculated automatically and you will have tax to pay.
PIR too high: you have been over-taxed during the year. Under rules in place since 2020, Inland Revenue's year-end calculation also works in your favour here — overpaid PIE tax is applied as a credit or refunded in your assessment. Before 2020 that money was simply lost, which is why older articles still say an over-high PIR is unrecoverable.

If you never provide a PIR or IRD number at all, the fund must use the 28% default rate — the highest individual rate. New PIE investors have 6 weeks to supply an IRD number before the account must be closed. So the worst self-inflicted outcome is doing nothing while qualifying for 10.5% or 17.5%.

What is the difference between PIR and RWT?

Both are tax rates you give a financial institution, which makes them easy to confuse:

PIR applies to income from PIE funds (KiwiSaver, most managed funds). Rates: 10.5%, 17.5%, 28%. Capped at 28%.
RWT (resident withholding tax) applies to bank interest and dividends from direct investments. Rates on interest go up to 39% — there is no 28% cap.

Your bank asks for an RWT rate for your savings account and a PIR for any PIE term deposit or cash fund it offers. They can legitimately be different numbers. See our RWT guide for that side of the picture.

When to get professional advice

PIR selection is mechanical for a salary earner with one KiwiSaver account, but gets harder with variable income, trusts, recent migration, or large portfolio shifts between direct and PIE investments. Consider speaking with a professional if:

Your income fluctuates around the $53,500 or $78,100 thresholds
You are a new or transitional tax resident (special PIR rules apply)
You are restructuring investments between direct holdings and PIE funds

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This guide is general information, not financial or tax advice. Thresholds are as at July 2026 per Inland Revenue (ird.govt.nz) and can change. For your personal situation, consult an accountant or an FSPR-registered financial adviser.