Your PIR (Prescribed Investor Rate) is the tax rate applied to returns inside multi-rate PIE funds, which include many managed funds and index funds on NZ investing platforms as well as KiwiSaver schemes. You give the rate to each fund provider, and the provider deducts tax at that rate.
There are three PIR rates for NZ tax residents: 10.5%, 17.5% and 28%. Your rate comes from your income in each of the last two tax years, and IRD uses the lower rate either year gives. If you give no rate, the fund uses 28%. After the tax year, IRD's end-of-year PIE calculation squares up a wrong rate: a shortfall is added to your tax bill, and overpaid tax is credited against your income tax with any remainder refunded.
What Is a PIR Rate?
PIR stands for Prescribed Investor Rate. It’s the flat tax rate that a multi-rate PIE (Portfolio Investment Entity) fund deducts from the returns it attributes to you.
PIE returns are taxed separately at your PIR instead of being added to your personal income and taxed at your marginal rate. The maximum PIR is 28%, below the 33% and 39% income tax rates, so for higher earners PIE returns are taxed at less than their marginal rate.
Not every fund is a multi-rate PIE. IRD’s PIE guide (IR855) lists listed PIEs among the PIEs that “do not calculate their tax using their investors’ PIR”, and some funds aren’t PIEs at all; the fund’s product disclosure statement says which applies.
The Three PIR Rates
Each rate has two tests: your taxable income, and your taxable income plus PIE income. A rate applies if, in either of the last two tax years, both of its tests are met.
| PIR | Taxable income | AND taxable income plus PIE income |
|---|---|---|
| 10.5% | $15,600 or less | $53,500 or less |
| 17.5% | $53,500 or less | $78,100 or less |
| 28% | Neither test met in either year |
(The 17.5% rate also applies if your taxable income was $15,600 or less but taxable plus PIE income was over $53,500 and not over $78,100.)
Tax years run 1 April to 31 March. IRD’s Find your prescribed investor rate page says the PIR for the tax year ending 31 March 2027 “is based on your income for each of the last 2 tax years”, the years ended 31 March 2025 and 31 March 2026.
Taxable income includes
- Salary and wages (before PAYE)
- Self-employment income
- Rental income
- Interest income
- Most other taxable income
PIE income is left out of the first test and counted in the second.
How to Work Out Your PIR
Step 1: Find your taxable income, and your PIE income, for each of the last two tax years.
Step 2: For each year, find the lowest rate whose two tests that year meets.
Step 3: Your PIR is the lower of the two years’ rates.
Example
Sarah earned $62,000 in 2024–25 and $71,000 in 2025–26. Both years exceed $53,500, so her PIR is 28%.
Tom earned $45,000 in 2024–25 and $55,000 in 2025–26, with a small PIE balance. His 2024–25 taxable income was under $53,500 and his taxable plus PIE income that year was under $78,100, so his PIR is 17.5%, even though his most recent year was over $53,500.
What Happens If You Set the Wrong PIR?
IRD’s end-of-year PIE calculation, part of your annual income tax assessment, works out the PIR you should have used for the full year and compares the tax paid with the tax due.
If your PIR was too low
The fund deducted less tax than was due. The shortfall is a PIE debt, added to any income tax you have to pay.
If your PIR was too high
The fund deducted more tax than was due. The overpayment is a PIE credit: IRD says it “can be used to reduce any income tax you might have to pay. Any remaining credit is refunded.” Until the assessment, that money is out of your fund.
In a year a fund makes a loss, the effect reverses: the fund credits you tax at your PIR, so too high a rate gives too large a credit, and IRD collects the difference as a PIE debt.
How Much the Rate Changes
For a $100,000 portfolio returning 8% in a year ($8,000), the tax at 17.5% is $1,400 and at 28% it is $2,240, a difference of $840 deducted that year.
How to Update Your PIR Rate
Each multi-rate PIE provider holds its own record of your PIR, so a change goes to every provider you invest with, through the provider’s website or app or by contacting it. IRD’s PIE guide also says that when IRD identifies you are on the wrong rate, it may advise the provider of the rate that is appropriate for you.
PIR Rate and KiwiSaver
KiwiSaver schemes are PIEs, so the same PIR applies to your KiwiSaver returns and is set with your KiwiSaver provider. The KiwiSaver-specific detail, including the 28% cap for higher earners and the rules for new residents, is in KiwiSaver PIR rate explained.
Frequently Asked Questions
Do I need to tell IRD my PIR? No. You tell your fund providers, not IRD directly. Providers report to IRD, which checks the rate in its end-of-year PIE calculation.
My income varies a lot year to year — which year counts? IRD uses the lower rate from either of the last two tax years. One year with taxable income of $53,500 or less (and taxable plus PIE income of $78,100 or less) gives 17.5%; one year at $15,600 or less (and $53,500 or less in total) gives 10.5%.
I’m self-employed with variable income. How do I handle this? The test uses the taxable income from your IR3 (individual income tax return) for each year. A low-income year in the last two can give a lower PIR even if your current year is high.
Does PIR apply to interest from bank accounts? No. Standard bank savings accounts and term deposits are not PIE funds. Interest earned is taxable income, with resident withholding tax deducted by the bank. PIR only applies to PIE funds.
What if I’m a non-resident? IRD’s PIE guide says a New Zealand resident who invested in a multi-rate PIE and then stops being resident (and isn’t a notified foreign investor) should have a PIR of 28% from the date they leave New Zealand. IRD’s factsheet IR858 covers non-residents who invest in PIEs.
Summary
| Situation | Your PIR |
|---|---|
| Both years income > $53,500 | 28% |
| At least one year income ≤ $53,500 (and total ≤ $78,100) | 17.5% |
| At least one year income ≤ $15,600 (and total ≤ $53,500) | 10.5% |
| No rate given to the provider | 28% (the default) |
The two-year test moves on each 1 April, so a change in income shows up in your PIR from the following tax year.
Next Steps
- FIF Tax NZ: Foreign Investment Fund Rules Explained: the other key tax rule for NZ investors
- Understanding Investment Fees NZ: how fees compound against returns
- Investing platforms NZ compared: fees and features by platform
- Back to Getting Started