Budget 2025: Investment & KiwiSaver Updates

The Government’s Budget 2025 titled The Growth Budget was released this week and it introduces two significant changes that could impact both business owners and individual savers: the Investment Boost tax incentive and adjustments to the KiwiSaver scheme.

We have summarised the key details below to help you understand how these changes may affect your finances or business planning.

New Tax Incentive: Investment Boost -

Budget 2025 introduces Investment Boost, a new tax deduction aimed at encouraging business investment in productive assets such as tools, machinery, and equipment.

From 22 May 2025, eligible businesses can claim an immediate 20% deduction from taxable income on qualifying asset purchases. This deduction is in addition to standard depreciation.

Eligibility Criteria:

To be eligible for the Investment Boost:

• The asset must be new to New Zealand (including second-hand imports).

• It must be subject to depreciation under current tax rules.

• It must be first available for use on or after 22 May 2025.

In addition to standard equipment and tools, the Investment Boost also applies to:

• New builds of commercial buildings

• Seismic strengthening

• Other qualifying capital improvements to commercial properties

This initiative may be particularly valuable for businesses planning capital upgrades or expansion.

We recommend reviewing your asset purchase plans to determine eligibility.

KiwiSaver Scheme Updates -

Budget 2025 also introduces several changes to KiwiSaver, aimed at boosting long-term savings and ensuring the scheme is sustainable.

Key changes:

• The default employee and employer contribution rate will increase:

  • To 3.5% from 1 April 2026

  • To 4% from 1 April 2028

• Employees may opt down to 3% temporarily if needed.

Eligibility expansion:

• From 1 July 2025, government contributions will extend to 16 and 17 year olds.

• Employer contributions will apply from 1 April 2026.

Government Contribution Changes:

• From 1 July 2025, the annual government match will reduce to 25 cents per $1 contributed, up to a cap of $260.72.

• Individuals earning more than $180,000 annually will no longer be eligible for the government contribution.
  

What This Means for you -

While these changes are designed to enhance retirement savings, the rising employer contribution rate represents a cost increase for businesses.

You may need to plan ahead and adjust payroll budgets - especially if you manage a growing team or operate in a labour-intensive industry.

Hence, now is a good time to:

• Review your employee benefits structure

• Update your financial forecasts to account for future KiwiSaver costs

• Consider how these changes might impact wage negotiations or contractor transitions.

Need help navigating these updates?
At Kinghans Limited, we support businesses in understanding and adapting to policy changes.
Whether you're planning asset purchases or budgeting for increased employer contributions, we're here to help..

Contact us today for strategic support tailored to your business.