Key Points from the 2025 Budget

Here’s a quickfire summary of Budget 2025. The Budget has increased spending in health, education, defence, and law and order, as well as delivering targeted support for business investment and infrastructure growth.

Investment Boost

The new "Investment Boost" tax incentive aims to accelerate business capital spending. From 22 May 2025, businesses can immediately deduct 20% of the cost of eligible new plant, equipment, technology, or work vehicles in the year of purchase—on top of standard depreciation rules. The scheme also applies to new commercial buildings, which are otherwise ineligible for depreciation. There is no cap on the value of assets claimed.

KiwiSaver

Significant changes to KiwiSaver take effect from 1 July 2025. Government contributions will halve to 25 cents per dollar (capped at NZ$260.72 annually) and will be removed altogether for individuals earning over NZ$180,000.

Eligibility is being extended to 16- and 17-year-olds, with compulsory employer contributions starting 1 April 2026.

The minimum contribution rate for both employers and employees will increase to 3.5% in April 2026 and to 4% in April 2028. However, members may apply for a 12-month “savings rate reduction” to remain at 3%.

Health

A $7 billion increase in health funding will support infrastructure upgrades, additional capacity for elective surgeries and outpatient services, enhanced dementia and aged care, and longer prescriptions (up to 12 months) for those with chronic conditions.

Education

Education receives a major funding boost to improve support for students with additional learning needs. This includes hiring more specialist staff and teacher aides, building new classrooms for children with disabilities, investing in early numeracy interventions and improving school attendance by tackling truancy.

Defence

Defence spending rises to fund modernisation across land, sea, air, and space. The Budget includes funding for new maritime helicopters, two new aircraft to replace an ageing fleet, and investment in cyber and space capabilities to improve NZDF readiness.

Infrastructure

A significant increase in capital investment will support upgrades across multiple sectors. Key projects include improvements to the national rail network, new school facilities, an expansion of Christchurch Men’s Prison with 240 high-security beds, and a new housing fund to build more social and affordable rental homes.