Resident withholding tax, or RWT, is tax deducted from interest paid to you on savings and deposits. Your bank withholds it at the rate you have nominated and pays it to Inland Revenue, so you receive the interest net of tax.

What RWT rate should I choose?

Your RWT rate should match your income tax rate. If it is too low you may face a bill at year end, and if too high you have effectively overpaid and wait for a refund. The rates line up with the income tax brackets.

How do I avoid a bill on my interest?

Set your RWT rate to your correct marginal tax rate with your bank. If you do not give a rate and an IRD number, a high default rate can apply, so it is worth setting it correctly.

RWT Calculator

This New Zealand calculator works out the resident withholding tax deducted from your bank interest and the net interest you actually receive. You enter your interest earned and your RWT rate, and it shows the tax withheld, your after-tax interest, and flags whether your chosen rate matches your income so you neither overpay nor face a bill. It explains how RWT links to your tax rate and PIR, and why the wrong rate is a common cause of a year-end square-up, helping savers set the right rate from the start.

Interest earned (before tax)

Your RWT rate

net interest after resident withholding tax

Interest earned$0

RWT withheld$0

Your RWT rate should match your income tax rate. Too low risks a bill at year end; too high means a refund later. The rates line up with the income tax brackets. If you do not give your bank a rate and IRD number, a high default rate can apply. Estimate only, not tax advice.

How it works

The calculator multiplies your interest by your RWT rate to find the tax withheld, then subtracts it to show the net interest you receive. Because RWT is deducted at the rate you nominate, choosing a rate that matches your income tax rate means the tax on your interest is about right by year end. A rate set too low leaves a shortfall to pay, while one set too high simply lends Inland Revenue money until you get it back.

Worked example

On $1,200 of interest at a 30% RWT rate, $360 is withheld and you receive $840. If your correct rate were 33%, too low a rate would leave a small amount to pay at year end on that interest.

Related calculators

Term Deposit Calculator: deposit interest.
Savings Calculator: savings growth.
Income Tax Calculator: your tax rate.
Tax Refunds and Bills guide: the year-end square-up.

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