Budget 2025 halved the KiwiSaver government match to 25c per $1 and capped it at $260.72 a year. Here is what changed, who it hits hardest, and four moves to make this KiwiSaver year.
Budget 2025 quietly rewrote the maths on one of the most reliable top-ups in New Zealand saving. From 1 July 2025 the government contribution that boosts your KiwiSaver every year was cut in half, and a new income test now shuts higher earners out entirely. None of it stops working, but the payoff is smaller, so the way you contribute matters more than it used to.
This guide breaks down exactly what changed, what it costs the average account over time, and four moves to make this KiwiSaver year.
TL;DR: what changed and what to do
TL;DR: From 1 July 2025 the KiwiSaver government contribution dropped from 50c to 25c per $1, and the annual maximum fell from $521.43 to $260.72 12. To claim the full amount, personally contribute at least $1,042.86 in the KiwiSaver year (about $20 a week) 3. Earn over $180,000 and you now get nothing 4.
What is the headline change in Budget 2025?
The government KiwiSaver contribution is the annual payment Inland Revenue drops into your account each July as a reward for contributing during the year. For its entire history it matched 50 cents for every $1 you put in, up to a cap.
Budget 2025 halved that. From 1 July 2025, the match is 25 cents for every $1 you contribute 1. The mechanism is unchanged, your contributions still trigger it automatically, but the rate is now half what it was.
A quick reminder of who counts as "you" here: only your own contributions trigger the match. Employer contributions, and anything ESCT (employer superannuation contribution tax) is deducted from, do not count toward it 3. This is easy to overlook, and it matters more now that the pool is smaller.
What is the new annual maximum, and how do I still claim the full amount?
The new maximum annual government contribution is $260.72, down from $521.43 2. To earn the full amount you must personally contribute at least $1,042.86 between 1 July and 30 June 3. Hit that figure and you collect every cent of the top-up; fall short and you get 25c on each dollar you did manage to put in.
Here is how that breaks down into a contribution you can actually plan around:
| To get the full government contribution | Amount |
|---|---|
| Personal contributions needed (the KiwiSaver year) | $1,042.86 |
| Per week | about $20.06 |
| Per fortnight | about $40.11 |
| Per month | about $86.91 |
| Government contribution you receive | $260.72 |
| Effective match rate | 25c per $1 1 |
If you are an employee on at least the minimum rate earning roughly $30,000 or more, your own deductions already clear $1,042.86, so you are likely getting the full amount without lifting a finger. The people who miss out are usually the self-employed, contractors, those on parental or unpaid leave, low-hours and seasonal workers, and anyone who has paused contributions.
People in these groups often fall short of the threshold without realising the top-up is still theirs to claim. A one-off voluntary top-up before 30 June fixes it.
How much is the smaller match actually worth over time?
On its own, $260.72 a year does not sound like a portfolio-changer. Compounded across a working life it still adds up, but the cut genuinely matters most for the people it was designed to help.
The Retirement Commission modelled exactly this. Halving the match drops the government contribution's share of a low earner's (under $30,000) final balance over 40 years from 15-20% down to 6-11%. For someone on $100,000, where the top-up was always a rounding error, its share falls from about 5% to roughly 1% 11. In other words, the cut bites hardest at the bottom and is barely felt at the top.
Two points matter here. First, the lost $260.72 a year compounds, so over decades it adds up. Second, it is now small relative to your own contributions and your investment returns, so the better response is to focus on the levers you control: your contribution rate and your fund.
How do I offset a smaller match? Contribution rate and fund type
The match was never the engine of a KiwiSaver balance. Your contribution rate and your fund choice always did the real work, and now they carry even more of the load.
Lift your contribution rate
The default employee and employer minimum rate is already scheduled to rise from 3% to 3.5% on 1 April 2026, then to 4% on 1 April 2028 5. You do not have to wait for that, you can choose 3%, 4%, 6%, 8% or 10% today 5. Moving from 3% to 4% on an $80,000 salary adds about $800 of your own money a year before any growth, well above the $260.72 difference in the match.
If cash flow is genuinely tight, note that from 1 February 2026 you can apply to IRD for a temporary rate reduction back to 3% for between three months and 12 months, with no limit on how many times you can apply 6. It is a release valve, not a default setting, use it deliberately.
Check your fund type and what it costs
This is where most of the upside sits. Across the sector, total fees reached $868.5 million, holding at about 0.7% of funds under management 7, and the gap between a low-cost index growth fund and an expensive one compounds far more than a halved match.
| Growth KiwiSaver fund | Annual fee (p.a.) | 5-yr average return (after fees & tax) |
|---|---|---|
| Simplicity Growth | 0.24% (cut from 0.25% on 1 Sep 2025) [a] | 6.01% p.a. to 31 Mar 2026 [b] |
| Kernel (core index funds) | 0.25% (thematic 0.45%) [c] | see latest fund update [c] |
| Sorted growth-fund average | 1.07% [b] | 4.96% p.a. to 31 Mar 2026 [b] |
That fee column is not trivia. On a $100,000 balance, the difference between 0.24% and the 1.07% sector-average growth-fund fee is about $830 a year, more than three times the full government contribution. Run your own numbers through our KiwiSaver growth calculator to see how the rate and the fee compare with the match.
Picking a fund is not just about the lowest fee, though. The bigger question is whether you are in the right fund type for your timeframe; a 28-year-old saving for retirement and a 61-year-old planning to draw down at 65 should rarely be in the same fund. Smiths Financial has no in-house KiwiSaver product, so any recommendation comes from comparing across every major NZ provider. That is the call made alongside fees in a KiwiSaver review.
Who is most affected, and who barely notices?
The change is not felt evenly. A quick read on where you sit:
| Group | Impact of the smaller match |
|---|---|
| Low earners (under $30,000) | Most affected — the top-up was a big share of their balance 11 |
| Self-employed / contractors | Hit hard — no auto-deductions, so they must top up manually to get any match 3 |
| On parental or unpaid leave | At risk of missing the $1,042.86 threshold entirely 3 |
| Employees earning $30,000+ on 3%+ | Barely notice — already clear the threshold, just collect less top-up |
| Earning over $180,000 | Now get nothing — newly excluded by the income test 4 |
| 16-17 year-olds | Newly eligible for the contribution from 1 July 2025 4 |
Two structural shifts sit inside that table. First, from 1 July 2025 anyone with taxable income over $180,000 no longer qualifies for any government contribution 4. Second, eligibility now starts at age 16 rather than 18, and from 1 April 2026 compulsory employer contributions extend to eligible 16- and 17-year-olds too 410. If you have a teenager in their first job, this is worth acting on.
What other KiwiSaver settings should I check while I am at it?
A match cut is a useful prompt to give the whole account a once-over. Two settings quietly cost people money far more often than the match ever will.
Is your PIR correct?
Your prescribed investor rate (PIR) sets the tax on your KiwiSaver returns. Get it too high and you overpay; too low and you face a bill. From 1 April 2025 the thresholds are:
| PIR | When it applies (broadly) |
|---|---|
| 10.5% | Taxable income $15,600 or less (and income + PIE income $53,500 or less) 8 |
| 17.5% | Taxable income $53,500 or less (and income + PIE income $78,100 or less) 8 |
| 28% | Taxable income $53,501+, or income + PIE income $78,101+ 8 |
Incorrect PIRs are common, often people stuck on 28% who should be on 17.5%. It is a quick fix that can be worth hundreds a year.
Is your employer paying the right ESCT?
Employer contributions are taxed via ESCT, banded from 10.5% up to 39% (10.5% / 17.5% / 30% / 33% / 39% at $18,720 / $64,200 / $93,720 / $216,000 from 1 April 2025) 9. Worth a glance on a payslip to confirm the right band is applied. While you are in there, sanity-check your fund and rate against your goals using our KiwiSaver health check.
For the fundamentals behind all of this, our KiwiSaver guide covers contributions, fund types and withdrawals in plain English.
Action checklist: 4 moves to make this KiwiSaver year
1. Confirm you will hit $1,042.86 by 30 June. Add up your year's personal contributions. Short? Make a one-off voluntary top-up before 30 June to claim the full $260.72 23. This is the single highest-value move for anyone self-employed or on reduced hours.
2. Reset your contribution rate. If you can afford it, move from 3% to 4% (or higher) now, ahead of the default rising to 3.5% on 1 April 2026 5. Your own contributions move the needle far more than the match.
3. Check your fund type and fee. Confirm you are in the right fund for your timeframe and not paying well above the 0.24%-0.25% that low-cost index growth funds charge [a][c]. Model it on the growth calculator.
4. Fix your PIR (and check ESCT). Make sure your prescribed investor rate matches the 1 April 2025 thresholds so you are not overpaying tax on returns 8.
Frequently asked questions
What is the new KiwiSaver government contribution for 2025/26? From 1 July 2025 the government pays 25c for every $1 you contribute, up to a maximum of $260.72 a year, down from 50c and $521.43 previously 12. You must personally contribute at least $1,042.86 in the KiwiSaver year to get the full amount 3.
How much do I need to put in to get the full government contribution? At least $1,042.86 of your own contributions between 1 July and 30 June, which works out to roughly $20 a week, $40 a fortnight or $87 a month 3. Only your contributions count, not your employer's 3.
Do I still get the government contribution if I earn over $180,000? No. From 1 July 2025, members with taxable income over $180,000 a year no longer qualify for any government contribution 4. Below that threshold, eligible members aged 16 to 65 still receive the 25c match.
Is it still worth contributing to KiwiSaver after the cut? Yes. The match shrank, but your own contributions and your fund's returns were always the main drivers of your balance. A halved fee or a one-step lift in your contribution rate each outweighs the lost $260.72 a year over time 711.
When does the minimum contribution rate go up? The default employee and employer minimum rises from 3% to 3.5% on 1 April 2026, then to 4% on 1 April 2028. You can still choose 3%, 4%, 6%, 8% or 10% at any time 5.
Can I temporarily lower my contribution rate if money is tight? Yes. From 1 February 2026 you can apply to IRD for a temporary reduction back to 3% for between three months and 12 months, with no limit on how many times you apply 6.
Book a free KiwiSaver review with a Smiths adviser. Book a review
General information, not personalised financial advice. Seek advice tailored to your situation before acting. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority and is a member of the Financial Dispute Resolution Service (FDRS). Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Last reviewed 16 June 2026.
Sources
- 1.Inland Revenue — KiwiSaver changes (government contribution cut to 25c per $1, from 1 July 2025).
- 2.Inland Revenue — KiwiSaver changes (maximum annual government contribution $260.72, KiwiSaver year 1 July 2025 – 30 June 2026).
- 3.Inland Revenue — Getting the KiwiSaver government contribution ($1,042.86 personal contribution threshold, KiwiSaver year 1 July 2025 – 30 June 2026).
- 4.Inland Revenue — KiwiSaver changes ($180,000 income cap; eligibility from age 16, from 1 July 2025).
- 5.Inland Revenue — KiwiSaver changes (minimum rate 3% to 3.5% on 1 April 2026, then 4% on 1 April 2028).
- 6.NZDF KiwiSaver — Budget Changes 2025 (temporary rate reduction to 3% for three months–12 months, from 1 February 2026).
- 7.Public Trust — summary of FMA KiwiSaver Annual Report 2025 (total fees $868.5 million, 0.7% of FUM, year ended 31 March 2025).
- 8.Inland Revenue — Find your prescribed investor rate (PIR) (10.5% / 17.5% / 28% thresholds, tax year ending 31 March 2026).
- 9.Inland Revenue — Get ready for new ESCT and FBT changes (ESCT thresholds 10.5% / 17.5% / 30% / 33% / 39% at $18,720 / $64,200 / $93,720 / $216,000, from 1 April 2025).
- 10.Deloitte NZ — New year, new KiwiSaver rules, same you (compulsory employer contributions for 16- and 17-year-olds, from 1 April 2026).
- 11.Te Ara Ahunga Ora Retirement Commission — Budget 2025 Analysis of KiwiSaver changes (government contribution share of a low earner's final balance 15–20% to 6–11%, and a $100,000 earner's share ~5% to ~1%, May 2025).
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