Budget 2025: What It Means for NZ Businesses

Budget 2025 was delivered on 22 May with a strong focus on investment into NZ infrastructure — wondering what this means for your business?

May 25, 2025

On 23 May 2025, Finance Minister Nicola Willis delivered a Budget focused on economic recovery, productivity, and future-focused investment. Framed as a “responsible budget to secure New Zealand’s future,” the announcements aim to help the country bounce back from recession while setting the stage for long-term growth.

So what does Budget 2025 mean for your small business? Let’s break down the key takeaways and opportunities.

Economic Outlook: A Brighter Road Ahead

The Government is projecting real GDP growth of 2.9%, with expectations of more jobs, higher wages, and better opportunities for Kiwi families and businesses. While cautious, the outlook signals a gradual economic recovery and renewed optimism for New Zealand’s financial future.

Introducing ‘Investment Boost’ – A Game-Changer for SMEs

One of the most talked-about Budget initiatives is the new Investment Boost scheme, which offers an immediate 20% tax deduction for businesses purchasing new capital assets.

What qualifies?

New machinery, equipment, vehicles, or technology
New commercial or industrial buildings
Imported assets not previously used in NZ
Assets also eligible for R&D tax credits

How it works:
In the year of purchase, businesses can claim 20% of the asset’s cost on top of normal depreciation — significantly improving cash flow and reducing tax.

Tax Impact Example:

Cost of new equipment: $10,000
Immediate deduction: $2,000 (Investment Boost)
Remaining depreciable value: $8,000 (standard depreciation applies)

If your business has $60,000 taxable income, the $2,000 deduction reduces it to $58,000 — giving you an immediate tax saving (at 28% company tax rate, that’s $560 saved in year 1).

Strategies for SMEs to Consider:

Bring forward planned asset purchases
Revisit capital improvement plans
Review cash flow projections with your accountant
Prioritise qualifying building or infrastructure upgrades
Consider eligible imports or property investments

Important: This scheme is designed to stimulate investment, not justify unnecessary spending. Don’t invest $1 just to save 28c in tax.

KiwiSaver Changes: Planning Ahead is Key

Big changes are coming to KiwiSaver, affecting employees, employers, and high-income earners. Key Changes are:

Contribution Rate Increases:
Employer and employee default rates will rise gradually from 3% to 4%.

3.5% from 1 April 2026
4% from 1 April 2028

Employees can opt to remain at 3% temporarily.

Youth Contributions:
Employer contributions will be extended to 16–17-year-olds from 1 April 2026.

Government Contributions:
From 1 July 2025:

The max government contribution is halved to $260.72
Those earning over $180,000 will no longer receive the government top-up

Employer Tip: Budget now for increased contributions in future payroll costs, especially if you employ younger staff.

Infrastructure Investment = Opportunity

The Government is injecting billions into NZ infrastructure, including:

$1B for hospitals and health facilities
$700M+ for schools
$2.7B for defence capability upgrades
$460M+ for rail network improvements

This capital investment is expected to open up project work, tenders, and long-term contracts, particularly for contractors, suppliers, and businesses in construction, logistics, and technology.

Other Key Updates

Working for Families & Best Start Tax Credits

From 1 April 2026, thresholds and abatement rates will change to better target support.
Best Start payments will be income-tested for all years for children born after 1 April 2026.

Foreign Investment Encouragement

$65M has been allocated to attract foreign investment in NZ infrastructure.
Establishment of Invest New Zealand as a central hub for foreign investors.

Science & Innovation

Funding for Crown research reform, gene technology regulation, and support for the Elevate NZ Venture Fund, encouraging VC investment in Kiwi tech startups.

Inland Revenue Compliance Funding

An extra $35M per year has been allocated to boost tax compliance, with $280M in projected revenue. Businesses should ensure their tax affairs are in order.

Final Thoughts: What Should You Do Next?

Thinking of investing? Talk to us about whether your planned purchases could qualify for the 20% Investment Boost.

Worried about KiwiSaver costs? Let’s look at cash flow planning and options available to you as the contribution rates change.

Contracting or infrastructure-focused? Stay alert for upcoming Government tenders and opportunities.

Let’s Talk Budget 2025

Have questions about how the Budget affects your business? Get in touch — we can help you make informed decisions, claim every eligible deduction, and plan for the future.