The 2025 New Zealand Budget is here, but what does it actually mean for NZ business owners? We break down the key changes and how they could impact your business.
1. New tax incentives: Big win for business investment
A new Investment Boost allows businesses to immediately deduct 20% of the cost of eligible new business assets including new commercial buildings on top of standard depreciation. This applies to eligible new assets purchased from 22 May 2025 onwards. For assets under construction before 22 May 2025, they are eligible if they are first used or available for use on or after 22 May 2025. Unlike standard depreciation which is spread over several years, this upfront deduction offers an immediate tax benefit, improving cash flow in the year of purchase.
How the Investment Boost works for business owners
For example, if your business purchases new machinery valued at $100,000, you’ll now be able to claim an immediate $20,000 deduction in the current financial year under the new Investment Boost. The remaining $80,000 would still be depreciated over time, as usual.
This upfront deduction directly reduces your taxable income, potentially saving you thousands in tax depending on your business's profitability and overall tax position.
This incentive is designed to stimulate business investment by lowering the after-tax cost of acquiring new capital assets. It supports better cashflow in the short term and reduces the cost of growth and expansion.
The Investment Boost applies only to new (not second-hand) business assets, and specifically excludes land, trading stock, and intangible assets such as goodwill or patents. To qualify, assets must be both purchased and first used or installed ready for use on or after 22 May 2025. This includes items such as new commercial buildings, vehicles, plant, IT systems, and manufacturing equipment. The deduction is applied in the year the asset is first used, so timing of your purchase is crucial.
If you're considering upgrades, system replacements, or facility improvements in the next 12 months, this could be a great opportunity to accelerate those plans. If you have any questions about how this may apply to your business, please reach out to ensure you're making the most of this incentive.
For more details on the Investment Boost announced in Budget 2025, click 👉 HERE to download the official Fact Sheet.
2. KiwiSaver: Employer costs are rising
The minimum employer contribution rate for KiwiSaver will increase from 3% to 3.5% in April 2026, and then to 4% from April 2028.
This means that for every $1,000 of gross pay, employers will be contributing an additional $5 in 2026 and an additional $10 by 2028, compared to current levels. This will have a cumulative impact on your payroll costs over time. These changes are part of the Government’s effort to strengthen retirement savings in New Zealand.
Employers will need to plan for these rising obligations as part of long-term workforce planning and budgeting.
While the increases are phased in, the end result will be a higher wage cost per employee enrolled in KiwiSaver. The Government is also halving the annual government contribution to KiwiSaver for individuals from $521 to approximately $261 per year effective 1 July 2025. In addition, high-income earners (those earning over $180,000 annually) will no longer be eligible for this contribution. This could affect the savings behaviour and long-term balances of some employees. For employers, these changes may prompt questions from staff around take-home pay, retirement planning, and overall benefits packages.
It’s a good time to review how KiwiSaver is communicated internally and ensure your payroll systems are set up to manage the changes smoothly.
3. Funding support: Apprenticeships and R&D (research and development)
The government has confirmed ongoing support for the Apprenticeship Boost, which provides a wage subsidy to employers who take on first-year apprentices.
The subsidy is targeted at industries experiencing skill shortages such as construction, engineering, manufacturing, and some primary industries. Businesses can receive up to $500 per month per apprentice for their first year of training. This can significantly reduce the cost of hiring and training new staff, making it easier for businesses to invest in developing their future workforce.
Employers looking to expand their teams or support existing employees into formal training roles should consider how this funding can be integrated into their workforce planning. To access the subsidy, employers must be registered with an appropriate industry training organisation (ITO) and ensure the apprentice is enrolled in a recognised qualification.
The 15% R&D tax credit remains available for eligible businesses undertaking research and development. This allows companies to claim a credit equal to 15% of their eligible R&D expenditure, which can be used to offset their tax liability. Activities that qualify can include product development, system improvements, and testing of new technologies or processes. This credit is especially relevant for manufacturing, technology, and product-based businesses looking to stay competitive. The tax credit is administered by Inland Revenue and Callaghan Innovation, and to access it businesses must register their activities and submit an R&D supplementary return.
For those not currently claiming this credit, it may be worthwhile to assess whether current or planned innovation projects qualify. To find out more click 👉 HERE.
4. Sector and regional support
Investment in infrastructure including transport, education, and tourism is expected to benefit certain sectors indirectly through increased regional activity. This includes funding for large-scale construction projects, upgrades to regional airports, school redevelopments, and enhancements to visitor facilities across New Zealand.
While not targeted directly at SMEs, businesses located in regions receiving infrastructure investment may see increases in foot traffic, job creation, and new supply chain opportunities. This can create indirect demand for goods and services provided by local businesses, such as logistics, trades, food service, and professional support. For example, if a local hospital or transport hub is being developed, nearby businesses may see a rise in demand from contractors, new workers moving to the area or increased tourism activity. Staying connected with your local economic development agencies, chambers of commerce, or regional councils can help you stay informed about upcoming projects and opportunities.
The message from the Government is clear, they are focused on stimulating growth, which is encouraging. As we've outlined, there are several initiatives within this Budget that may provide direct benefits to your business. However, it's also a timely reminder that the most effective results often come from focusing on what you can control. Having clear goals and a solid plan to achieve them is key to moving your business forward.
If you have any questions about the 2025 Budget or how the changes might impact your business, now is the time to get clarity and plan ahead. Our team is here to help you understand what the Budget means for your business and how to respond strategically. Whether it’s cash flow planning, tax implications, or identifying new opportunities, we’re ready to support you.
Get in touch with us today to ensure your business is prepared and positioned for success in the year ahead - call us on 0800 555 024.
Disclaimer: The information provided in this article is intended for general informational purposes only and may not apply to the specific details of your business. For personalised and tailored advice, we recommend reaching out to our professional team. While we strive to provide accurate and up-to-date content on our website, RightWay assumes no responsibility for any business loss or damage that may arise from relying on the information provided.
