What stood out in Budget 2025
To help cut through the noise, we’ve highlighted the key takeaways from Budget 2025 and what they mean in practical terms.
Firstly, some thoughts behind budgeting that apply just as much to individuals and organisations as they do to government decision-making:
A budget is the best plan that can be written down on the day to determine the path ahead.
It aims to achieve the best possible outcome for the community it serves.
Not everyone will get what they want or feel they deserve.
Every dollar spent must come from somewhere: income or borrowing.
Sometimes short-term sacrifices are necessary to deliver long-term gains.
Many won’t agree with the choices made, often due to unbalanced access to all the information.
In our experience, any budget is almost out of date the moment it’s finalised. Like any good management tool, it needs to be reviewed, measured, and modified as time unfolds.
Key takeaways
This year’s budget from the Coalition Government delivered the usual mix of announcements: some welcomed, some criticised. After decades of underinvestment in core activities and capital projects, it’s clear there’s a lot of catch-up required. But as always, the true test will be in the delivery not just the announcements.
1. Minor KiwiSaver contribution changes
Default contributions for both employers and employees will rise to 3.5% from April 1, 2026, and to 4% from April 1, 2028.
Several complex exemptions and other minor adjustments were also included.
2. Expanded means testing for benefits
New and expanded means testing, including parental income testing, will apply to some benefits and allowances.
Current social policy rulings already being used will suggest that these tests are likely to be effective and there will be limited opportunities to plan around them.
3. Accelerated depreciation for new assets (BOOST)
From Budget Day onwards, eligible new capital assets can receive an extra 20% depreciation claim in Year 1.
Exclusions: land, residential buildings, second-hand items, and fixed-life intangibles (e.g. G3 kiwifruit licences).
Potential early cash benefit is between 5 – 6% of the sum paid for the new gear (e.g. $100,000 x 20% x 28% = $5,600 cash tax reduction in year 1).
It's a helpful cashflow benefit but not the windfall some headlines have suggested. This isn’t an extra claim just an acceleration of currently allowed deductions.
4. Increased IRD funding for audits
Inland Revenue has been allocated an additional $35 million per year to support audit and investigation activities.
That means more contact, reviews, and questions, particularly everyday businesses such as yours and ours.
5. Other technical tax changes
There were smaller, technical adjustments to rules around FIF (Foreign Investment Funds), FBT (Fringe Benefit Tax), thin capitalisation, and PIEs (Portfolio Investment Entities).
Final thoughts
The budget aims to lay out a path for tackling some of the country’s most pressing issues. But the money has to come from somewhere and with borrowing already stretched, the focus now needs to be on growth: more jobs, stronger businesses, and increased productivity. That’s what will carry us forward.
As always, if you’d like to talk through how any of these changes might affect you or your business, feel free to get in touch. We’re here to help.