The New Zealand Government has introduced a new Investment Boost, a year-long, front-loaded tax incentive designed to encourage Kiwi businesses to invest in productive assets and bolster the nation’s economic recovery. Unveiled in the 2025 Budget and effective from 22 May 2025, companies can immediately deduct 20 percent of the cost of eligible new assets—on top of standard depreciation—boosting cash flow and promoting capital expansion.
What does it cover?
The boost can be applied to new machinery, tools, vehicles, imported second-hand assets, software, websites, new commercial buildings, and primary-sector land improvements. Residential properties, land itself, and already-used domestic assets are ineligible.
Why introduce it?
Finance Minister Nicola Willis states that by improving cash flow earlier in the investment lifecycle, small and large businesses will find more opportunities financially viable. Treasury projects the boost will lift GDP by 1% and wages by around 1.5% over the next 20 years—with half of those gains occurring within five years.
Basic example
Consider a manufacturing firm buying an environmental test chamber for NZ$200,000. Normally, they’d depreciate 10.5% per year (a deduction of $21,000 in year one). With the boost, they can deduct an extra 20% ($40,000) immediately—bringing total year-one deductions to $56,800. At the 28% company tax rate, this equates to over NZ$10,000 less tax payable that year.
Bottom line
The Investment Boost offers a meaningful cash-flow advantage to businesses investing in growth, making NZ assets—whether machinery, vehicles, or tech—an attractive proposition. As firms reinvest immediate savings, the government expects productivity gains, higher wages, and stronger economic momentum.
Learn more about these changes here. Still have more questions? Get in touch with Sidekick today!
