NZ Budget 2026: What your small business needs to know

Budget 2026 was light on major business-related announcements. But there are some key changes to taxation that may affect your Kiwi small business. Read our Budget summary.

“At a time when many New Zealand families and businesses are still under pressure from higher living costs and global uncertainty, this Budget takes careful steps to support New Zealanders now while strengthening the economy for the years ahead”

Hon. Nicola Willis, Finance Minister, Budget 2026

On 28 May 2026, the Finance Minister, Nicola Willis, stood to deliver Budget 2026 to the House of Representatives.

The Budget was heralded as ‘a responsible Budget to secure NZ’s future’. But it’s also a Budget delivered at a point when the New Zealand economy, the Middle East crisis, fuel shortages and widespread unemployment are making it challenging to balance the books.

Let’s look at the economic outlook, the main announcements and where any measures have been introduced that could affect your small business

The main economic outlook

The big takeaway was the Government’s forecast that New Zealand will return to surplus in 2028/29, removing the current debt and providing greater funds to invest in key infrastructure projects and the future prosperity of the country.

The key economic forecasts:

New Zealand economy to grow by an average of 2.7 per cent over the next four years.
Unemployment forecast to fall from 5.5 to 4.3 per cent.
Wages to continue to rise faster than inflation.
The Government’s books are forecast to return to surplus in 2028/29, a year earlier than previously forecast, with debt beginning to fall sooner as a share of the economy.

The main Budget 2026 announcements

The key focus of the Budget was to ‘boost funding for essential services and invest in the infrastructure New Zealand needs for the future’. As such, many of the main announcements are focused on infrastructure projects and additional capital for the country’s key services.

Based on the Finance Minister’s announcements, Budget 2026: Secures New Zealand’s future by getting back to surplus and reducing debt as a share of GDP. Invests to drive better results in health, education, and law and order.

Delivers jobs-rich infrastructure projects including hospitals, schools, courthouses, police stations, rail upgrades and a new Road of National Significance.

Provides temporary, timely and targeted support for households and public services facing fuel price pressures.

Drives forward reforms to increase energy security, boost housing growth and replace the RMA. Continues to rebuild the capacity of the Defence Force so it can protect New Zealand’s interests. Improves the fairness of housing support and supports the delivery of up to 2,250 more social houses.

Ends final-year Fees Free while doubling the number of Trades Academy places for years 11 to 13 students and funding 1,000 more Youth Guarantee places for school leavers.

The main announcement for Kiwi business owners

On the whole, there were very few major announcements for the Kiwi business community. Continued investment in infrastructure projects will mean more opportunities for the construction and engineering sectors, but measures to help support Kiwi small businesses through their current economic challenges were thin on the ground.

Announcements that may impact business owners include:

Research & Development (R&D)

Changes to the Research and Development Tax Incentive (RDTI): Rather than making businesses wait until the end of the tax year, the RDTI is being changed to introduce in-year payments. This will help businesses get the tax credit sooner, supporting ongoing research activities by removing a key cashflow barrier.

Changes to the rules for claiming internal software expenditure: The cap on non-administrative internal software for R&D is being reduced from $25 million to $3 million. This balances the trade-offs between encouraging R&D activities and ensuring the tax credit is well targeted.

Other R&D changes: Other changes include increasing the flexibility of the RDTI return deadlines by giving the Commissioner of Inland Revenue the discretion to accept and amend late RDTI filings. The Government is also expanding the range of R&D expenditure mining businesses can claim under the RDTI.

Foreign Investment Fund

Changes to the Foreign Investment Fund (FIF): Budget 2025 introduced a new method to calculate a recent migrant’s Foreign Investment Fund (FIF) tax on unlisted shares. Budget 2026 extends this method to all New Zealand taxpayers, ensuring tax is paid only on realised gains and actual dividends.

Increase to the FIF de minimis threshold: Budget 2026 also raises the FIF de minimis threshold for overseas investments from $50,000 to $100,000, reducing the number of small investors who are required to apply the FIF rules.

Fringe Benefits Tax

Changes to Fringe Benefits Tax (FBT) for motor vehicles: Budget 2026 simplifies fringe benefit tax (FBT) rules for private motor vehicle use by removing the requirement for detailed logbooks and replacing it with a ‘close enough is good enough’ approach for logging vehicle usage.

The tax system

Outstanding loans for liquidated companies to be taxed as income: Six months after a company has been liquidated, or otherwise removed from the Companies Register, any outstanding loans it previously made to its shareholders will be taxed as income.

Changes to thin capitalisation settings: The Government is also updating thin capitalisation settings for foreign-owned New Zealand banking groups to align with prudential requirements.

More funding for the Revenue to chase non-compliance: Budget 2026 also invests a further $15 million per annum for Inland Revenue debt compliance activities.

Banking and finance

New prudential levy for banks: Budget 2026 introduces a new prudential levy on banks and other financial institutions to help cover the cost of regulation and supervision by the Reserve Bank.

Charities and non-profit organisations

Changes to the tax rules for charities and non-profits: The Government is improving tax rules for the charitable and not-for-profit sector to ensure fairness and resilience. Key changes include:

Increasing the amount of net income a not-for-profit organisation can earn without paying tax from $1,000 to $10,000.
Ensuring the donation tax credit scheme remains financially sustainable by capping eligible donations at $100,000 per year. This will also limit tax planning risks that can arise when a donor makes a gift to a charity they control themselves.
Allowing donors to receive their donation tax credit refunds throughout the year in certain circumstances, rather than waiting until the end of the tax year.
Allowing donors to gift their donation tax credit to a charity.
Ensuring that membership subscriptions and levies received by not-for-profits remain non-taxable.

If there are any announcements from Budget 2026 that you believe could impact your small business, please come and have a chat with our team.

We’ll be happy to run you through the implications for your business type and industry and offer advice on how to boost the positives and mitigate the negatives of these announcements.

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