ESCT: the tax on your employer's KiwiSaver contribution

How ESCT works

Since 1 April 2026, an employer generally has to pay at least 3.5% of your gross salary or wages into your KiwiSaver on top of your pay, if you are 16 to 64 and contributing from your pay yourself. Your employer can choose to drop it to 3% while you have a temporary rate reduction. That minimum rises to 4% on 1 April 2028. Each payday your employer deducts ESCT from its contribution and pays both the tax and the rest of the contribution to Inland Revenue, which passes the contribution on to your KiwiSaver scheme. A complying fund is paid directly.

Three rules decide what you get:

• Your rate is set by one employer's figures. It is based on your salary or wages from that employer plus its gross contributions in the previous tax year. If you are new, the employer estimates this year's total instead. It does not need to know what you earn elsewhere.
• ESCT applies to all of the employer's contributions, including any above the 3.5% minimum.
• Your own contributions do not carry ESCT. They come out of pay that has already been taxed through PAYE.

An employer and employee can also agree to treat some or all of the contribution as salary or wages, taxed through PAYE instead of ESCT.

ESCT rates for 2026/27

Inland Revenue's PAYE tables for pay periods from 1 April 2026 set these bands:

Each threshold works out at exactly 1.2 times the matching income tax threshold ($15,600, $53,500, $78,100 and $180,000), so the ESCT bands are not the income tax bands: check this table, not the income tax one.

A worked example on $80,000

Say you start a new job on an $80,000 salary. You did not work there last year, so your employer estimates this year's total. Its 3.5% is $2,800 a year before tax. Add that to the salary and the total is $82,800, which is in the 30% band:

• ESCT: $2,800 at 30% is $840.
• What reaches your KiwiSaver from your employer: $1,960, which is 2.45% of your salary.
• Your own 3.5%, also $2,800, comes out of your pay. At 2026/27 rates, with ACC at 1.75% and KiwiSaver at 3.5%, you take home $59,522.50 a year, or $4,960.21 a month.
• Together, $4,760 a year goes into your account, before any government contribution.

Because the contribution is part of the total, it can tip you into the next band. For a new employee on $62,000, the estimated total is $64,170 and ESCT is 17.5%. On $62,100, it is $64,273.50, and the whole contribution is taxed at 30%. For somebody who was there last year, the rate comes from last year's pay and contributions, when the minimum was 3%.

When the minimum rises to 4% on 1 April 2028, the same $80,000 salary would bring $3,200 before tax, and $2,240 after ESCT at today's bands.

ESCT when you compare job offers

An offer of $80,000 plus KiwiSaver is worth more than an offer of $80,000 "total remuneration", where the employer's contribution comes out of the quoted figure. Paying the contribution out of the package is allowed only if you agree to it, and your pay must still be at least the minimum wage without it. Our article on salary against the total package explains how to spot the difference.

Two more things to check. An employer offering 6% instead of 3.5% is offering more, but each extra dollar is taxed at your ESCT rate too. And while you are on a KiwiSaver savings suspension, your employer can stop its contributions, and the ESCT with them, unless your agreement says otherwise.

The Offer Comparer adds each offer's employer KiwiSaver to its package value, with no account needed. It shows the contribution before ESCT, as its footnote says, so for a close call take ESCT off using the table above.

Compare the whole offer, not just the salary