KiwiSaver contributions don’t reduce Working for Families tax credits, and the KiwiSaver government contribution doesn’t count as family income. This page sets out how each part of KiwiSaver (your contributions, your employer’s and the government’s) is treated in the Working for Families income test. The government contribution itself, including how much you need to contribute for the full amount, is covered on the KiwiSaver government contribution page, and the other guides in this section are on the KiwiSaver strategies hub.
Working for Families in Brief
Working for Families (WFF) is a package of tax credits for families with dependent children: the Family Tax Credit, the In-Work Tax Credit, the Minimum Family Tax Credit and Best Start. Entitlements are worked out from family scheme income, the combined income of both partners, and the amounts, abatement thresholds and eligibility rules are on the Working for Families guide.
Do KiwiSaver Contributions Affect Working for Families?
No. KiwiSaver employee contributions are deducted from pay that has already been taxed: they don’t reduce your taxable income, so they don’t reduce the family scheme income IRD uses for WFF.
What this means: Changing your KiwiSaver contribution rate does not change your WFF entitlements in either direction.
Does the Government Contribution Count as Income?
No. The government contribution (up to $260.72 a year from 1 July 2025, down from $521.43) is paid by IRD to your KiwiSaver provider. It does not appear in your personal income and does not affect your Working for Families calculation.
For a family receiving WFF, contributing $1,042.86 in the year to 30 June brings in the full $260.72 with no reduction in WFF credits and no tax on the government contribution itself.
Employer Contributions
Employer KiwiSaver contributions are taxed through ESCT at source and are not included in your personal income for income tax purposes, so they do not affect your WFF calculation either. How ESCT works is in the KiwiSaver employer contributions guide.
KiwiSaver and the In-Work Tax Credit
The In-Work Tax Credit has had no minimum hours test since 1 July 2020: you qualify if you earn income from paid work and don’t get a main benefit. KiwiSaver membership or contributions don’t affect it.
PIR for Lower-Income Families
Your prescribed investor rate (PIR) is set by your own income, not your family’s: the lowest rate (10.5%) applies if your taxable income in either of the last two income years is $15,600 or less, and 17.5% applies up to $53,500 (each with a combined-income test). A PIR set too high means overpaying tax on returns until IRD’s end-of-year PIE calculation, which turns the excess into a credit against other income tax and refunds any remainder; the full thresholds are in KiwiSaver PIR rates explained.
Summary: How Each Part Is Treated
| KiwiSaver item | Counted in WFF family scheme income? |
|---|---|
| Your employee contributions | Not deducted: your income is measured before them |
| Employer contributions (net of ESCT) | No |
| Government contribution | No |
| Voluntary contributions | Not deducted, like employee contributions |
What If Your Income Changes?
WFF entitlements are squared up at the end of the tax year based on your actual family income. If your income changes significantly during the year, updating your WFF estimate with IRD reduces the risk of an end-of-year debt; the Working for Families abatement guide shows how income changes affect the credits.