Budget 2025 at a glance

Finance Minister Nicola Willis has released ‘The Growth Budget’ for 2025.

Some of the key highlights include:

• Changes to KiwiSaver.

• A tax incentive for businesses.

• Investments in health, education, law and order, and other public services.

• Defence Force funding.

• New infrastructure, including hospitals and schools.

• Targeted cost-of-living support.

What are the main changes, and what do they mean for you?

Read on to find out.

KiwiSaver changes

Summary of key changes:

• The default employee and employer contribution rate is increasing to 4%. This increase will happen in two steps: increasing to 3.5% from 1 April 2026, then increasing to 4.0% from 1 April 2028.

  • If you are unable to contribute at these higher rates, you can opt to stay at a 3.0% contribution rate for up to 12 months at a time. You can renew this rate before you’re automatically bumped up to the new default rate.

• The government will extend the government contribution to 16- and 17-year-old KiwiSaver members from 1 July 2025 and extend employer matching contribution to 16- and 17-year-olds KiwiSaver members from 1 April 2026.

• The annual government contribution is being reduced from $521.43, up to a maximum of $260.72. The contribution rate is being halved from 50 cents per dollar to 25 cents per dollar. These changes take place from 1 July 2025.

• Members with an income of more than $180,000 will not receive the government contribution from 1 July 2025.

What this means for you:

• Despite a reduced government contribution rate, the government contribution still provides a good 25% return on $1042.86 per year between ages 16 and 65.

• Increasing contribution rates is a step in the right direction, which means that KiwiSaver balances will grow faster.

• Minors aged 16 and 17 can now receive government contributions and employer matching contributions.

• These KiwiSaver changes are being rolled out over the next few years, which gives businesses adequate time to plan their cash flows and adjust systems to implement these changes.

• Members with an income of over $180,000 will still get employer matching contributions up to 4.0% by April 2028 but no longer receive any government contribution from 1 July 2025.

• The New Zealand Retirement Expenditure Guidelines, researched and published by Massey University, note that an average couple living in a city will need about $1,739.85 per week to have a comfortable (choices) retirement. NZ Super will contribute $828.34 per week for couples (after tax). Having saving schemes like KiwiSaver helps to close the gap between how much more you need to save in order to have a comfortable retirement.

Investment Boost

Summary of key changes:

• Businesses can deduct 20% of a new asset’s value from that year’s taxable income, on top of normal depreciation.

What this means for you:

• If you are a business owner that invests in productive assets like machinery, tools, and equipment, Investment Boost can help improve business cash flow and make more investment opportunities financially viable.

• The government forecasts that this policy could boost GDP by 1% and wages by 1.5% over the next twenty years.

Other changes

Summary of other key changes:

• New funding to ensure New Zealanders can access timely, quality healthcare. This includes a $5.5 billion funding increase for hospitals and specialist services, over $1 billion for health infrastructure, $447 million to expand access to urgent care and after-hours services across New Zealand, and over $1 billion for additional cancer treatments.

• New funding to help lift school achievement. This includes $646 million to support children with additional learning needs, $100 million of new funding towards extra maths help for students who need it, and a $140 million package for services to lift school attendance.

• New funding to continue the government’s efforts to restore law and order. This includes $480 million of additional funding to support frontline policing, $472 million to manage prison growth from stronger sentencing laws, $246 million to reduce court delays and improve access to justice for victims, and $35 million for Customs to combat drug smuggling and organised crime.

• New funding to support the provision of social services. This includes $774 million to respond to the Royal Commission of Inquiry into Abuse in Care, $275 million for social investment initiatives including the creation of a Social Investment Fund, and $760 million to support the provision of Disability Support Services.

• New funding to support Kiwis doing it tough. This includes increasing the maximum prescription length from three months to twelve months, enabling additional SuperGold cardholders to get a rates rebate, and lower costs for around 115,000 teachers.

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You can also view further information about what the budget delivers using the button below.

Budget at a glance

If you would like to discuss your KiwiSaver, investment portfolio, retirement planning needs, goals-based investing approach, or any other financial planning matters, please feel free to give our office a call at 09 553 8928 or email us at info@trilogyfs.co.nz.

We are always happy to help.

Sincerely,

The Team at Trilogy Financial Solutions