PIE income is one of those NZ tax terms that sounds more confusing than it really is. If you’ve ever invested in a KiwiSaver PIE, a managed fund, or anything labelled a Portfolio Investment Entity, you’re already earning PIE income—whether you realise it or not.
And here’s why it matters. Unlike regular investment income, PIE income is taxed differently. It’s often taxed at a lower rate, it’s not included in your personal tax return, and when set up properly, it can help you legally pay less tax. Sounds good, right?
This article is here to give you the full picture. We’ll explain the real PIE income meaning, how it works in practice, what your prescribed investor rate (PIR) has to do with it, and who benefits most. If you’re investing in New Zealand and want to avoid rookie mistakes, or if you’re just tired of staring blankly at your fund reports, you’re in the right place.
Let’s break it all down in plain English.
What is PIE income in New Zealand?
To understand PIE income meaning, we need to look at how it fits into the New Zealand tax system. PIE stands for Portfolio Investment Entity and refers to a specific type of investment structure that offers tax advantages for individual investors.
Definition of PIE (Portfolio Investment Entity)
A Portfolio Investment Entity (PIE) is a fund that pools money from multiple investors and invests in a variety of assets, like shares or bonds. The key benefit? The income earned from a PIE is taxed at a rate based on your prescribed investor rate (PIR), not your personal income tax bracket.
This structure was introduced to encourage long-term investing by making tax treatment simpler and more favourable.
How PIE income differs from other investment income
Unlike bank interest or dividends, PIE income isn’t included in your IR3 individual tax return if your PIR is correct. You also won’t need to worry about provisional tax on this income.
Here’s a quick breakdown:
- No end-of-year tax surprises if PIR is correct
- Taxed at a capped rate, max 28%
- Lower compliance burden for investors
Learn more from IRD’s official PIE guidance
How is PIE income taxed in NZ?
Now that we’ve defined it, let’s explore how PIE income is taxed. The system is designed to be simple but comes with a few key rules you need to understand to avoid paying too much or too little.
Prescribed investor rate (PIR) explained
Your prescribed investor rate is the tax rate applied to your PIE income. It’s based on your total income over the last two years, not just the current one. You must select the correct PIR with your fund provider.
For example:
- Income under $14,000 = PIR of 10.5%
- Income between $14,001–$48,000 = PIR of 17.5%
- Income over $48,000 = PIR of 28%
From 1st April 2025, the rates will change (see below). Check your PIR with IRD’s PIR tool.
PIE vs marginal tax rate comparison
Here’s how PIE tax stacks up against traditional income tax rates in New Zealand.
Comparison of tax rates for 2025 tax year
| Income Range (NZD) | PIE Tax Rate | Personal Tax Rate |
|---|---|---|
| $0 – $14,000 | 10.5% | 10.5% |
| $14,001 – $48,000 | 17.5% | 17.5% |
| $48,001 – $70,000 | 28% | 30% |
| $70,001 – $180,000 | 28% | 33% |
| $180,001 and above | 28% | 39% |
Tax rates vs PIR (2026 tax year) from 1st April 2025
| Taxable income plus PIE income | Taxable income | PIR (PIE Tax Rate) | NZ Individual Tax Rate (2026) |
|---|---|---|---|
| $15,600 or less | $0 – $15,600 | 10.50% | 10.50% |
| $53,500 or less | $15,601 – $53,500 | 17.50% | 17.50% |
| $78,101 or more | $53,501 – $78,100 | 28.00% | 30.00% |
| (Note: PIE cap) | $78,101 – $180,000 | 28.00% | 33.00% |
| (Note: PIE cap) | $180,001 and over | 28.00% | 39.00% |
You can clearly see that for higher earners, PIE income offers a chance to reduce your tax exposure. Want to learn more about tax brackets and how they affect you? Read this guide on NZ tax codes.
Benefits of investing in PIE funds
Let’s talk benefits. This is where PIEs shine, especially if you’re looking for low-maintenance investing with tax efficiency built in.
Tax efficiency and no end-of-year surprises
With PIE income, the tax is taken care of by the fund. If your PIR is accurate, you won’t need to include it in your annual tax return. That means fewer surprises, fewer calculations, and less stress during tax season.
Key benefits:
- Capped tax at 28%, even for high earners
- Tax is final – no need to file PIE income
- Helps avoid provisional tax
KiwiSaver and other PIE-structured funds
Most KiwiSaver providers structure their investment schemes as PIEs, making them more attractive than traditional savings or term deposits.
You can read more about how recent changes impact your fund in our article on KiwiSaver changes and tax rules for KiwiSaver when living overseas.
Bullet list:
- Many KiwiSaver schemes = PIEs
- Long-term compounding = better net returns
- No extra tax if PIR is right
More info at Sorted.org.nz
Who should care about PIE income?
This isn’t just for investment nerds. If you’ve got money in KiwiSaver or any managed fund, PIE income affects you. But some people can benefit more than others.
If your income is over $48,000 – this is for you
High-income earners in NZ can face marginal tax rates of up to 39%. With PIEs, the cap is 28%. That’s a big win.
If your earnings push you into a higher tax bracket, PIE income can help keep your overall tax bill in check.
Business owners and PIEs: what to consider
Even if you own a business, investing in PIEs in your personal name can help diversify your assets. And because the income doesn’t go through your company, it avoids company tax rules altogether.
External link: Read more on PIEs from FMA’s official overview
Common mistakes with PIE income
The system is designed to be easy, but there are still traps people fall into. Most of them relate to using the wrong PIR, which can trigger underpayments or overpayments.
Choosing the wrong PIR
Your PIR is not static. It needs to reflect your recent income, which means it can change year to year. If you’re unsure, update it with your provider or check with your accountant.
Bullet list:
- Too high = you overpay and can’t get it back
- Too low = you underpay and might owe IRD
Not declaring a change in income level
Your PIR might have been correct last year, but if your income dropped or increased significantly, it could be wrong this year. IRD holds you responsible for this.
Bonus for PIE income meaning
Let’s wrap this up with a final insight. Understanding the PIE income meaning isn’t just about tax. It’s about making smarter investment decisions that align with your financial goals.
PIE funds in a diversified investment plan
If you’re building a portfolio, PIEs offer a mix of flexibility, diversification, and tax control. They can complement other investments like property, term deposits, and shares.
How accountants and financial advisors use PIEs strategically
Professionals often use PIEs to help clients smooth their tax liabilities over time. It’s a smart move for retirement planning, estate preparation, or simply improving after-tax returns.
Final thoughts on PIE income meaning
Understanding the PIE income meaning gives you a real advantage when it comes to investing in New Zealand. It’s not just tax jargon—it’s a practical tool that can help you reduce your tax bill, simplify your return, and get more out of your long-term investments. Whether you’re growing your KiwiSaver, building a managed fund portfolio, or just trying to make smart financial moves, knowing how PIE income, PIR, and your total income work together is key.
If you’re not sure your PIR is correct or want help making the most of your investment income, it’s worth speaking to a tax professional who knows the ins and outs of the system. It could save you money and a lot of admin down the road.
FAQ about PIE income meaning
What is PIE income in New Zealand?
PIE income is investment income earned through a Portfolio Investment Entity, taxed at a capped rate based on your PIR.
Do I need to include PIE income in my tax return?
No, if your PIR is correct and applied by your provider, tax is final and it doesn’t need to be included in your IR3 return.
What happens if I use the wrong PIR?
If your PIR is too low, you may owe extra tax. If it’s too high, you’ve overpaid and generally can’t get a refund.
Is KiwiSaver considered PIE income?
Yes, most KiwiSaver funds are PIEs, meaning the income they generate is taxed under the PIE system.
Can non-residents earn PIE income?
Yes, but tax rules can be different. If you’re overseas, check out this article on KiwiSaver tax when living overseas for guidance.