NZ Provisional Tax Comparison Calculator
Compare the three provisional tax methods — Standard, Estimation, and AIM — side by side. See exactly how much you'll pay and when for the 2025-26 tax year.
From your previous year's tax assessment (IR3/IR4)
Your best estimate of this year's income tax liability
AIM requires turnover under $5 million
What is Provisional Tax?
Provisional tax is income tax paid in advance during the year, rather than as a lump sum at the end. If your residual income tax (RIT) from the previous year exceeded $5,000, you are required to pay provisional tax in the current year.
There are three methods to calculate how much provisional tax to pay: the Standard method, Estimation method, and the AIM (Accounting Income Method). Each method has different risk and cashflow implications.
The Three Provisional Tax Methods
Standard Method
Pay prior year RIT × 105% in three equal instalments. The safest option — no use-of-money interest (UOMI) as long as you pay on time.
Due: 28 Aug · 15 Jan · 7 May
Estimation Method
Estimate your current year's tax liability and pay in three instalments. Useful if income has fallen significantly — but UOMI applies if your estimate is too low.
Due: 28 Aug · 15 Jan · 7 May
AIM (Accounting Income Method)
Pay based on actual income each 2-month period using AIM-capable accounting software. No UOMI exposure. Available for businesses with turnover under $5 million.
Due: 6 payments per year (2-monthly)
Frequently Asked Questions
Who needs to pay provisional tax in New Zealand?
You need to pay provisional tax if your residual income tax (RIT) from the previous tax year was more than $5,000. RIT is the income tax you owe after all credits and deductions. This commonly applies to self-employed people, contractors, landlords, and investors with significant income not subject to PAYE.
What is residual income tax (RIT)?
RIT is your total income tax liability for a tax year, minus any tax credits (such as PAYE already withheld). It is the net amount you owe (or are refunded) after filing your income tax return. Your prior year RIT is shown on your IR3 or IR4 tax assessment.
What is use-of-money interest (UOMI)?
UOMI is interest charged by IRD when you underpay provisional tax. It applies when your actual tax liability turns out to be higher than the provisional tax you paid. The estimation method carries UOMI risk; the standard method and AIM do not — provided you pay on time.
Which provisional tax method is best?
The standard method is simplest and safest — ideal if your income is stable. Use the estimation method if your income has dropped substantially (paying 105% of last year's tax would over-pay). AIM suits businesses with AIM-capable software (Xero, MYOB) who want to match payments to actual income and eliminate UOMI risk.
What are the provisional tax due dates for 2025-26?
Standard and estimation methods: 28 August 2025, 15 January 2026, and 7 May 2026. AIM method: 6 payments due 28 June, 28 August, 28 October, 15 January, 28 February, and 7 May.
Can I switch methods during the year?
Yes. You can change from the standard method to the estimation method at any time by filing a revised estimate with IRD. However, UOMI will apply from the first instalment date if your revised estimate turns out to be too low.
What if I don't pay provisional tax on time?
If you miss a provisional tax payment, IRD will charge use-of-money interest and may also charge late payment penalties. It is important to pay by each due date to avoid these additional charges.
Is AIM the same as GST-ratio method?
No. AIM (Accounting Income Method) calculates provisional tax based on actual accounting income each 2-monthly period. The GST-ratio method was a separate option that has been phased out. AIM requires AIM-capable accounting software.
Sources
Provisional tax rules from Inland Revenue (IRD) — Provisional Tax . AIM rules from IRD — Accounting Income Method .
Last updated March 2026. Rates and thresholds sourced from IRD. This calculator is for informational purposes only. Consult a tax professional for advice specific to your situation.