Taxation (Budget Measures) Act 2025 was published in the Official Gazette on 29 May 2025.
New Zealand published the Taxation (Budget Measures) Act 2025 in the Official Gazette, after it received royal assent on 29 May 2025.
The Taxation (Budget Measures) Bill 2025 (No. 2) passed all parliamentary readings under urgency on 22 May 2025, allowing the Parliament to implement the Act.
The Act includes the Budget 2025 measures from the Taxation (Budget Measures) Bill (No 2), such as the “Investment Boost” tax incentive for businesses to invest in machinery, tools, and equipment. It also introduces KiwiSaver reforms.
Investment Boost
The Act introduces Investment Boost, a partial expensing regime that aims to lift capital investment and increase productivity. Investment Boost will achieve this by allowing businesses to immediately deduct 20% of the cost of qualifying assets, increasing their tax deductions in the year they acquire the asset.
Qualifying assets include most assets that are depreciable for tax purposes, as well as a number of assets that are allowed depreciation-like deductions and improvements to depreciable property.
The 20% Investment Boost deduction applies to assets acquired from 22 May 2025.
KiwiSaver reforms
Employers are currently required to contribute a minimum of 3% of an employee’s pay into their KiwiSaver account, provided the employee is also contributing at least 3% of their pay.
The Government also provides a government contribution in the form of a tax credit to KiwiSaver members aged between 18 to 64 by matching 50 cents of every dollar that members contribute to their KiwiSaver account to a maximum of NZD 521.43 per year.
The Act reforms key aspects of the KiwiSaver regime as follows:
- Increasing contribution rates for both employers and employees from 3% to 3.5% from 1 April 2026, and then to 4% from 1 April 2028.
- Allowing KiwiSaver members to apply to Inland Revenue for a temporary reduction in their contribution rate to 3% from 1 April 2026. The contribution rate would be reduced for a maximum period of 12 months, after which the KiwiSaver member would need to apply for another temporary rate reduction if they want the rate reduction to continue.
- Removing eligibility for the government contribution for all members with an annual taxable income of over NZD 180,000 from 1 July 2025.
- Halving the matching rate of the government contribution for all other KiwiSaver members from 50 cents to 25 cents per dollar contributed from 1 July 2025, with a new maximum tax credit of NZD 260.72 per year.
Earlier, New Zealand’s Minister of Finance, Nicola Willis, announced the 2025 budget on 22 May 2025.
