Businesses investing in vehicles, machinery and equipment are set to benefit from a new tax incentive unveiled in Budget 2025, aimed at spurring growth and lifting wages across the economy.
The Investment Boost initiative allows forms to immediately deduct 20% of the cost of new productive assets—including trucks, fleet vehicles, tools, and heavy equipment—on top of standard depreciation. It will result in a much lower tax bill in the year of purchase.
The goal is to improve cash flow and encourage faster investment in capital upgrades.
“Budget 2025 launches Investment Boost, a major new tax incentive to encourage businesses to invest, grow the economy, and lift wages,” Finance Minister Nicola Willis says.
“Economic growth is how we raise living standards, create higher-paying jobs and fund the growing cost of the public services Kiwis depend on.”
The policy applies to new assets purchased in New Zealand as well as new and used assets imported from overseas. It includes commercial buildings but excludes land, residential buildings, and assets already in use in New Zealand.
“There’s no cap on the value of eligible investments. All businesses, regardless of size, can benefit,” Willis says.
Treasury and Inland Revenue estimate the incentive will lift GDP by 1%, wages by 1.5%, and capital stock by 1.6% over 20 years, with about half those gains expected within the first five years.
“Investment drives productivity improvements, makes firms more competitive and supports employers to improve workers’ wages,” Willis says.
The policy is forecast to reduce tax revenue by an average of $1.7b per year over the forecast period, but Willis says it delivers better economic returns than a company tax cut.
“Investment Boost delivers more bang for buck than a company tax cut because it only applies to new investments, not those made in the past,” she says.
“It is designed to encourage firms to make more growth-enhancing investments now and into the future.
“Our Government knows businesses have been knocked around by challenging local and international economic conditions. This tax incentive shows that we are backing them to succeed.
“Now is the right time to support New Zealand’s economic recovery by making it easier for businesses to invest, hire more workers, pay them better, and contribute more to our long-term prosperity,” Willis says.
