Budget summary 2025

Yesterday, the government announced its budget for 2025.​

Key taxation measures include:​

This is a new incentive for New Zealand businesses purchasing capital assets that are first available for use on or after budget day (22nd May 2025).​

Investment Boost allows businesses a 20% tax deduction of the cost of new assets in the year the asset is purchased, as well as standard depreciation. This means a lower tax bill in the year of purchase.​

This applies to most assets that are depreciable for tax purposes, such as machinery, equipment and work vehicles. It also applies to the purchase of new commercial and industrial buildings.​

If a deduction is eligible for R&D tax credit, you can claim Investment Boost as well.​

Don't worry, you don't need to do anything to claim this as your accountant will calculate the extra tax deduction when they do your 2026 tax return.​

Changes to the Kiwisaver scheme are probably one of the largest talking points from this budget, with changes to all three contribution types and updates for youth and high-income earners.​

The default rates for employee and employer contributions will increase from 3% to 4% in a phased roll-out. From 1 April 2026, the rate will increase to 3.5%, followed by 4% from 1 April 2028. (Employees will be able to temporarily opt out of the increase if they feel they can’t afford an increased contribution).​

From 1 July 2025, the maximum government contribution will be halved. Currently, members receive 50c for every dollar contributed up to a maximum of $521.43. From 1 July, it will be 25c for every dollar up to a maximum of $260.72.​

People with an annual income of more than $180,000 will no longer receive the government contribution from 1 July 2025.​

This does not impact the current year’s government contribution which will be paid out in July/August.​

From 1 July 2025, the government contribution will be extended to 16 and 17 year olds, with the employer contribution coming in from 1 April 2026.​

From 1 April 2026, the abatement threshold for the family tax credit and in-work tax credit will increase from $42,700 to $44,900, and the abatement rate will change from 27% to 27.5%.​

The cost of this extra support will be offset by better targeting the first year of the Best Start tax credit (BSTC). From 1 April 2026, the first year will become income tested in line with how the second and third years of the BSTC currently are. This will apply to children born on or after 1 April 2026.​

From the 26/27 financial year onwards, Best Start applicants will also be required to provide family scheme income info at the time of application.​

Please note, budget measures are proposals until they have been passed into law.
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Taxation (Budget Measures) Bill (No 2) - full commentary on the proposals from Inland Revenue​

Budget at a glance - overview of the 2025 budget from The Treasury NZ​

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