What tax do I pay on my KiwiSaver?

Three taxes can apply: PAYE on your salary before your contribution is deducted, ESCT on your employer's 3.5% contribution (10.5% to 39% depending on your income band), and PIE tax on the fund's investment earnings at your PIR of 10.5%, 17.5% or 28%. Withdrawals at 65 are tax-free.

What is the ESCT rate for 2026/27?

ESCT bands are 10.5% on income up to $16,800, 17.5% to $57,600, 30% to $84,000, 33% to $216,000 and 39% above that. The band is based on the employee's income for the previous year including gross employer contributions, and an incorrect band is the most common KiwiSaver payroll error.

How do I know if my PIR is right?

Your PIR is 10.5% if your taxable income was $14,000 or less in either of the last two years, 17.5% if it was $48,000 or less, and 28% otherwise. Check myIR - being on 28% when you should be on 17.5% quietly costs about 10% of your fund earnings every year.

KiwiSaver and Tax

Updated for 2026 IRD rates

KiwiSaver Overview

KiwiSaver is a voluntary, work-based savings scheme designed to help New Zealanders save for retirement. It is administered by Inland Revenue, with funds managed by private KiwiSaver providers. Contributions come from employees, employers, and the government. Understanding the tax implications of KiwiSaver is important for managing your overall tax position.

Employee Contributions

As an employee, you choose your KiwiSaver contribution rate. The options are:

3% — Minimum employee contribution
4%
6%
8%
10%

Your contributions are deducted from your gross (before-tax) pay and are not subject to income tax. They are also not included in your taxable income for the purposes of Working for Families or student loan repayments.

Important: KiwiSaver contributions are deducted from your after-tax earnings for ACC purposes, meaning ACC levies are calculated on your gross pay before KiwiSaver deductions.

Employer Contributions

Employers must contribute at least 3% of your gross salary or wages to your KiwiSaver account. For the 2026 tax year:

Employer contributions are subject to Employer Superannuation Contribution Tax (ESCT)
ESCT rates vary from 10.5% to 39% depending on the employee's gross annual earnings from that employer
Employer contributions are not subject to ACC levies or student loan deductions
Employer contributions are tax-deductible for the employer

Employee Gross Annual Earnings	ESCT Rate
$0 – $18,720	10.5%
$18,721 – $64,200	17.5%
$64,201 – $93,720	30%
$93,721 – $216,000	33%
$216,001 and over	39%

Member Tax Credits (Government Contribution)

The government contributes to your KiwiSaver account as a member tax credit. From 1 July 2025 the credit was halved: it is now 25¢ for every $1 you contribute, up to a maximum of $260.72 per year (previously 50¢ and $521.43). To receive the full credit, you still need to contribute at least $1,042.86 to your KiwiSaver account between 1 July and 30 June each year.

PIE Tax on KiwiSaver Funds

KiwiSaver funds are invested through a Portfolio Investment Entity (PIE). This means the investment earnings in your KiwiSaver account are taxed differently from standard investments:

PIE tax is calculated at your Prescribed Investor Rate (PIR)
Your PIR is based on your total taxable income from the last 2 years
PIE tax rates are typically lower than your marginal income tax rate
The fund manager pays the tax on your behalf — you don't need to include KiwiSaver investment earnings in your personal tax return

Your PIR options are:

10.5% — if your total taxable income is $15,600 or less
17.5% — if your total taxable income is between $15,601 and $53,500
28% — if your total taxable income is over $53,500

If you notify your KiwiSaver provider of the wrong PIR, you may end up with a tax shortfall and be required to pay the difference through your annual tax return.

KiwiSaver and Your Tax Return

Generally, KiwiSaver contributions and investment earnings do not need to be included in your annual tax return. However, you should check:

If you've been using the wrong PIR, you may need to adjust your tax position
If you've been over-deducted or under-deducted for ESCT on employer contributions
If you're making voluntary lump-sum contributions and want to claim the maximum member tax credit

What Changed on 1 July 2025 and 1 April 2026

Two recent changes affect every KiwiSaver member. From 1 July 2025, the government's member tax credit was halved: it is now 25 cents for every dollar you contribute, capped at $260.72 per year (previously 50 cents and $521.43). You still need to contribute at least $1,042.86 between 1 July and 30 June to receive the maximum — the credit simply pays half as much. From 1 April 2026, the default contribution rate rises from 3% to 3.5% for both employees and employers (you can apply for a temporary reduction back to 3% for 3-12 months), and 16- and 17-year-olds become entitled to employer contributions for the first time. If you were already contributing 4% or more, nothing changes — the increase only affects members at the 3% default.

ESCT and PIE Rates for 2025/26

Employer KiwiSaver contributions are taxed through ESCT at the employee's marginal-rate-equivalent scale, which for 2025/26 runs: 10.5% up to $18,720 of gross annual earnings from that employer, 17.5% from $18,721 to $64,200, 30% from $64,201 to $93,720, 33% from $93,721 to $216,000, and 39% above $216,000. Investment earnings inside your KiwiSaver fund are taxed through the PIE regime at your prescribed investor rate: 10.5% if taxable income is $15,600 or less, 17.5% between $15,601 and $53,500, and 28% above that (or if you are a trustee). The PIE cap of 28% is a genuine advantage for higher earners — 33% and 39% bracket taxpayers pay less on KiwiSaver investment gains than on direct investments. Use myIR to check your PIR and update it if your income has crossed a threshold.

Related Guides

Deep dive — 2026 update

PAYE, ESCT and PIE: the three taxes on one KiwiSaver dollar

A single dollar moving through KiwiSaver can be taxed three times at three different rates, which is why so many payslips look wrong to members. In order:

Stage	Tax	2026/27 rate
Your contribution comes out of gross pay	PAYE on your salary	10.5% – 39% (progressive)
Your employer adds their 3.5%	ESCT	10.5%, 17.5%, 30%, 33% or 39%
The fund earns returns	PIE tax on investment income	Your PIR: 10.5%, 17.5% or 28%
You withdraw at 65	None	Tax-free

So a 39% earner's employer contribution is taxed at 39% before it is even invested, their fund earnings are taxed at 28%, and the withdrawal is free. Nothing is double-taxed, but the effective value of the employer contribution is materially lower for high earners than 3.5% suggests.

ESCT bands for 2026/27

Employee's taxable income (previous year, incl. employer contributions)	ESCT rate
$16,800 or less	10.5%
$16,801 – $57,600	17.5%
$57,601 – $84,000	30%
$84,001 – $216,000	33%
Over $216,000	39%

If an employee started part-way through the year, the employer must estimate annual income including gross employer contributions. Using the wrong band understates or overstates the amount credited — the most common payroll error in the scheme.

Worked example: $70,000 salary, 30% ESCT

Employee contribution: 3.5% × $70,000 = $2,450 (from after-tax pay, so the true cost is $2,450 of net income).
Employer contribution: 3.5% × $70,000 = $2,450 before ESCT.
ESCT at 30%: $735 withheld, so $1,715 is credited to the account.
Total into KiwiSaver for the year: $2,450 + $1,715 = $4,165, plus up to $260.72 of government contribution.

Getting your PIR right

Your Prescribed Investor Rate is 10.5% if taxable income in either of the last two years was $14,000 or less, 17.5% if it was $48,000 or less, and 28% otherwise. Overstating your PIR is expensive and invisible: a member on 28% who should be on 17.5% loses about 10% of every dollar of fund earnings, every year. Update it in myIR rather than assuming your provider did it for you.