New PIR Tax Thresholds for KiwiSaver Investors: What You Need to Know

By Paul de Klerk
Invesment Specialist (FSP110367)

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As of 1 April 2025, new income thresholds for calculating the Prescribed Investor Rate (PIR) tax on your KiwiSaver and other Portfolio Investment Entity (PIE) investments have come into effect in New Zealand.

These changes, announced in Budget 2024, align with personal income tax adjustments made on 31 July 2024, and could impact how much tax you pay on your investment returns.

Here’s a quick guide to what’s changed, what it means for you, and why now is the perfect time to double-check your PIR.

What’s Changed?

The PIR is the tax rate applied to your KiwiSaver investment income, and it’s based on your taxable income over the previous two tax years. The new income thresholds, effective 1 April 2025, are:

• 10.5% PIR: Taxable income up to $15,600 (previously $14,000) and total income (including PIE income) up to $53,500 over the last 2 years.

 

• 17.5% PIR: Taxable income up to $53,500 (previously $48,000) and total income up to $78,100 over the last 2 years.

 

• 28% PIR: Taxable income above $53,500 or total income above $78,100 over the last 2 years.

These updated thresholds mean some investors may now qualify for a lower PIR, potentially reducing the tax deducted from their KiwiSaver returns.

For example, if your taxable income is $50,000 and your total income is below $78,100, your PIR could drop from 28% to 17.5%, saving you money.


What Does This Mean for You?

A lower PIR means less tax is deducted from your investment earnings, leaving more money to grow in your KiwiSaver account. However, choosing the correct PIR is crucial:

• If your PIR is too low, you may face a tax shortfall at the end of the year, which Inland Revenue will include in your tax obligations.

 

• If your PIR is too high, you’re overpaying tax, which could reduce your returns unnecessarily. Overpaid tax may be refunded, but it’s better to get it right from the start.

Inland Revenue may notify your KiwiSaver provider if they believe your PIR is incorrect, but it’s your responsibility to ensure it’s accurate.


Action You Should Take Now

To make sure you’re on the right PIR and not over- or under-paying tax, follow these steps:

1. Review Your Income: Check your taxable income (e.g., salary, wages, and other income) and PIE income from the last two tax years (2023 and 2024 for the 2025 tax year). Your PIE income is reported on tax certificates issued by your KiwiSaver provider.
2. Calculate Your PIR: Use Inland Revenue’s “Find My Prescribed Investor Rate” tool or worksheet (available at www.ird.govt.nz) to determine your correct PIR based on the new thresholds.
3. Update Your PIR: Log in to your KiwiSaver account or contact your provider to confirm or update your PIR. Ensure your IRD number is also on file to avoid the default 28% rate. If you’ve recently changed jobs or income levels, this is especially important.
4. Check Annually: Review your PIR each year or whenever your financial circumstances change to stay compliant and optimize your returns.

Need Help?

If you’re unsure about your income details or how to calculate your PIR, reach out to me for assistance with updating your PIR or understanding your KiwiSaver account. 

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Conclusion

​The new PIR thresholds are an opportunity to potentially lower your tax rate and boost your KiwiSaver savings. By taking a few minutes to double-check your PIR, you can ensure you’re paying the right amount of tax and maximizing your investment growth. Log in to your account today or get in touch with me to confirm your PIR is correct.

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PAUL DE KLERK
Paul de Klerk (FSP110367) is a Kiwisaver and investment specialist working for the Financial Advice Provider known as De Klerk Business Services Ltd (FSP1105978). Nothing in this article should be considered as personal financial advice. If you need personalised investment advice, speak to Paul for free at www.pauldeklerk.co.nz/contact. For a disclosure statement visit www.pauldeklerk.co.nz/disclosure
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