Key Tax Announcements from Budget 2025 – What You Need to Know

Finance Minister Nicola Willis delivered the Government’s “growth-focused” 2025 Budget last week, unveiling a raft of tax-related changes aimed at boosting investment, infrastructure, and long-term productivity.

Dubbed the “Investment Boost”, this year’s Budget includes new depreciation rules, proposed tweaks across KiwiSaver, fringe benefit tax (FBT), employee share schemes (ESS), foreign investment fund (FIF) rules, and more. Here’s a summary of the key points relevant to businesses and individuals.

Accelerated Depreciation: ‘Investment Boost’

From 22 May 2025, eligible new assets can be partially expensed upfront—businesses can immediately deduct 20% of the asset’s cost (excluding certain contributions) in the first year, with the remainder depreciated as usual. This applies to most depreciable assets and even includes commercial and industrial buildings, farmland improvements, and certain horticultural investments. The scheme is optional and uncapped, but excludes land, residential buildings, previously used assets, and fully deductible items. If an asset is sold, some of the upfront deduction may be clawed back.

KiwiSaver Adjustments

To boost long-term savings while managing government contributions, changes include:

• Increasing minimum employee and employer contribution rates from 3% to 4% by 2028

• Reducing government top-up to 25 cents per dollar (down from 50 cents), capped at $260.72 annually

• Removing government contributions for those earning over $180,000

• Extending government and employer contributions to 16–17-year-olds

  
  

FBT and FIF Changes

The Government will proceed with FBT reforms, though details remain vague. Updates to the FIF regime are also coming, especially to reduce the burden on skilled migrants and returning Kiwis. A “Revenue Account Method” is proposed to tax gains only when realised, but the draft legislation is still pending.

Family Support: Working for Families & Best Start

The Working for Families abatement threshold will rise to $44,900 (up from $42,700), delivering about $14 more per fortnight to 142,000 families. This is offset by income-testing the first year of the Best Start tax credit.

Final Thought

Budget 2025 delivers a clear message: the Government wants to stimulate investment, build savings, and tighten compliance. Businesses and individuals alike should take stock of these changes and consider what adjustments may be needed to stay ahead.