22/05/2025
Budget 2025 summary per Inland Revenue NZ or visit www.budget.govt.nz
Today the Government has announced proposed tax changes as part of Budget 2025.
Key proposals include:
🔔 introducing Investment Boost which supports businesses with a 20% tax deduction for new (or new to New Zealand) business assets acquired on or after 22 May 2025. Examples of depreciable business assets include commercial and industrial buildings, machinery, equipment and work vehicles. Businesses will be able to claim Investment Boost in their income tax returns.
🔔 introducing changes to KiwiSaver including increasing the default employer and employee contribution rates from 1 April 2026 (with the ability to opt for a temporary rate reduction), extending eligibility so 16 and 17 year olds qualify for the government contribution from 1 July 2025 and employer contributions from 1 April 2026, reducing the rate the government contributes from 1 July 2025, and removing the government contribution for those earning over $180,000 annually from 1 July 2025.
🔔increasing the Working for Families abatement threshold and abatement rate from 1 April 2026.
🔔 applying the income-test to Best Start for the first year of entitlement from 1 April 2026 (currently only applies to years 2 and 3) with the abatement threshold and rate also applying to the first year of Best Start from 1 April 2026. Note: the abatement threshold is the income level where your entitlement starts to reduce due to the amount you earn. The abatement rate is the rate at which your entitlement decreases.
🔔 modernising the rules and reducing compliance costs for Fringe Benefit Tax (FBT).
🔔introducing a tax deferral regime for Employee Share Schemes (ESS).
The Government has also launched consultations on proposals to:
👉 improve Working for Families. Have your say by 3 July at www.taxpolicy.ird.govt.nz/wff-consultation
👉 reform the thin capitalisation rules to support infrastructure investment.
For further information about all Budget 2025 announcements, visit www.budget.govt.nz
