Budget 2025: What it Means for You and Your Business
On Thursday 22 May, the Minister of Finance, The Honourable Nicola Willis, delivered Budget 2025. Opening her speech, the Minister stated:
“This is a responsible budget to secure New Zealand's future. It supports the economic recovery now underway. It also takes a longer-term view with initiatives to boost future investment savings and growth.”
A Brighter Economic Outlook
The economic outlook is cautious but optimistic. The Government is focused on lifting New Zealand out of recession, with signs of growth on the horizon.
Real GDP growth is expected to rise to 2.9 percent. This is projected to lead to more jobs, increased incomes, and stronger opportunities for families and businesses to get ahead.
Government investment will be concentrated in health, education, law and order, and strengthening New Zealand’s defence forces.
How Budget 2025 Impacts Small Businesses
Several announcements in this year’s budget could directly affect small business operations, growth potential, and tax planning.
New ‘Investment Boost’ Initiative
Investment Boost is a new scheme designed to encourage investment in equipment, vehicles, tools, machinery, and technology.
Businesses will be able to deduct 20% of the cost of new eligible assets in the year of purchase — in addition to normal depreciation. This leads to a reduced tax bill and improved operating cash flow.
The scheme is available now and applies to all businesses, regardless of size. Eligible assets must be new (not used), and can be purchased in New Zealand or imported. Commercial buildings are included, but land and residential buildings are excluded.
KiwiSaver Contribution Changes
From 1 April 2026, the default rate of employee and employer contributions to KiwiSaver will increase from 3% to 3.5%, and then to 4% from 1 April 2028.
To support flexibility, employees will be able to temporarily opt down to the current 3% rate — and you can match that if needed. This may be useful if you’re managing cashflow or budgeting for rising costs.
From 1 April 2026, employer contributions will also extend to 16 and 17-year-olds, which may impact businesses with younger workforces.
Infrastructure Investment
Significant capital investment was announced to support New Zealand’s infrastructure. This includes:
$1 billion for hospitals and health facilities
Over $700 million for new schools
$2.7 billion (including $1.6 billion from Budget 2026) to boost defence force capability
$460+ million to upgrade the rail network
These projects could present major contract and subcontracting opportunities for businesses involved in construction, engineering, transport, and logistics.
Support for Foreign Investment
The Government has set aside $65 million to encourage foreign investment in New Zealand infrastructure by increasing the amount of tax deductible debt.
Science and Innovation Reforms
Budget 2025 includes funding to transform Crown research institutes and to establish a national gene technology regulator. These moves aim to modernise New Zealand’s science and research landscape and encourage innovation-led growth.
The Government also announced the creation of Invest New Zealand, a one-stop shop to coordinate and support foreign direct investment into the country.
Funding for Kiwi Startups
Additional support has been announced for the Elevate NZ Venture Fund, a government-funded initiative aimed at strengthening New Zealand’s technology start-up sector.
The fund is designed to encourage venture capital investment and fill the Series A and B capital gap for high-growth Kiwi companies — helping founders scale their businesses with access to smart capital.
Boost to Inland Revenue Compliance
The Government has committed an additional $35 million per year to Inland Revenue compliance activities. This investment is expected to generate an estimated $280 million in additional tax revenue.
It signals an increased focus on tax enforcement — so it’s a good time to ensure your tax records and processes are up to date.
Talk to Us About Budget 2025
You can view a full overview of Budget 2025 here.
If you’re unsure how the KiwiSaver changes or the Investment Boost scheme might affect your business, we’re happy to help. Get in touch — we’re here to talk you through the changes and what they could mean for your planning, payroll, and tax position.