Finance Minister Nicola Willis has told business leaders that changes to the Research and Development Tax Incentive and measures against income-tax bracket creep are National's next tax priorities after the Pre-election Economic and Fiscal Update on 29 September.
Speaking at BusinessNZ's 2026 Election Conference in Wellington on 15 September, Willis linked both signals to the fiscal envelope PREFU will set less than two months before the 7 November general election.
She pointed to BusinessNZ's election manifesto and the RDTI's track record. Willis said the credit was supporting innovation and that a specific announcement would follow PREFU, calling R&D the "next cab off the rank."
She also said National would address bracket creep so working people on average wages are not hit with steadily higher effective tax rates each year, with more detail after the update.
"We will wait until after the pre-election fiscal update (on 29 September) to make a specific announcement, but that's the next cab off the rank for me."
NZ Herald coverage interpreted the remarks as a hint of further personal income-tax relief if National is re-elected, timed after surplus is secured.
The fiscal envelope PREFU will lock in
The Budget Economic and Fiscal Update 2026 already maps that path. Treasury forecast an OBEGALx deficit of $11.4 billion, or 2.4% of GDP, in 2026/27, then a $2.6 billion surplus (0.5% of GDP) in 2028/29 and $6.1 billion in 2029/30 — a year earlier than the prior HYEFU track.
Net core Crown debt is forecast to peak at 46.1% of GDP in 2027/28 before declining. National's Budget Responsibility Rules lock the 2028/29 surplus target and a path toward debt below 40% of GDP. Any permanent personal-tax relief or RDTI expansion must be scored against that track.
The RDTI's track record
The RDTI currently pays a 15% credit on eligible R&D, with a $50,000 minimum spend and a $120 million expenditure cap. Official figures show it has supported more than $10 billion of business R&D. Science Minister Penny Simmonds has cited an estimated $1.40 of extra private R&D per dollar of credit.
Motu Research's first five-year evaluation found about 1,752 firms accessed roughly $1 billion in credits, generating an estimated $1.83 billion in additional R&D and a mid-point GDP lift of about $6.77 billion — roughly 4.2 times government outlay.
Total New Zealand R&D reached $6.4 billion in 2024, up 21% from 2022, with business contributing $4.0 billion (63%). Intensity sat at 1.55% of GDP, still below the long-standing 2% target and the OECD average near 2%.
Budget 2026 already redesigned the scheme without lifting the headline rate: quarterly in-year payments for cash-flow, a cut in the internal-software claim cap from $25 million to $3 million from 2027–28, expanded mining R&D eligibility, and more IRD flexibility. The package's net fiscal impact was savings of $84.6 million.
BusinessNZ's Election Priorities 2026 document, Building Tomorrow's Economy, argues the 15% rate is internationally uncompetitive. It wants a lift to at least 25%, and up to 50% for firms collaborating with local researchers. It also notes business R&D intensity of about 0.98% of GDP would take roughly 75 years to close the OECD gap at current speeds.
Bracket creep and the household squeeze
On personal tax, Inland Revenue analysis briefed to the Finance Minister shows inflation since 2010 has lifted average tax rates by about 1.65 percentage points even after Budget 2024 threshold changes. Workers in the $60,000–$90,000 band paid roughly an extra $2 billion in 2024 relative to fully indexed brackets. BusinessNZ wants automatic indexation of income-tax thresholds and a review of the $60,000 GST registration threshold, unchanged since 2009.
Corporate tax: the sharper partisan line
Corporate tax drew sharper partisan contrast. New Zealand's flat 28% company rate sits above the OECD average of about 24.1–24.2% cited by BusinessNZ and PwC, and above Australia's 25% base-rate entity rate. BusinessNZ seeks a staged reduction plus further Overseas Investment Act reform.
NBR reported NZ First's Shane Jones hinting at a corporate-tax shift. At the same panel, Jones emphasised his role in removing climate-related reporting burdens on firms rather than spelling out a rate cut.
"No more voice was louder than mine in ridding these unwanted burdensome ideological climate change reporting standards that had been imposed on New Zealand firms."
Labour's Barbara Edmonds pointed to the party's already-announced 28% capital gains tax on residential and commercial property gains from 1 July 2027, with the family home, farms, KiwiSaver, business assets and inheritances exempt, plus roll-over relief. She framed it as streamlining land rules and giving businesses certainty.
ACT leader David Seymour argued New Zealand has an anti-commerce culture and pressed red-tape cuts across holidays, health and safety, the RMA and fast-track settings. The Greens' Chlöe Swarbrick and Opportunity's Qiulae Wong stressed competition policy in energy, supermarkets and Commerce Commission enforcement. Greens policy would lift company tax to 33% only for firms with turnover above $30 million; Te Pāti Māori favours 33% across the board.
- National/ACT: lower headline company rate, targeted R&D expansion, bracket-creep relief post-surplus
- Labour: 28% capital gains tax on property from 1 July 2027, with roll-over relief for business premises
- Greens: company tax lifted to 33% for firms with turnover above $30 million only
- Te Pāti Māori: 33% company tax rate across the board
- NZ First: focus on cutting climate-reporting burdens rather than a stated rate cut
BusinessNZ cited March-quarter 2026 GDP growth of 0.8% versus Australia's 0.3%, and export earnings above $100 billion, as evidence of a competitiveness window that tax and regulatory settings must seize.
What it means for firms and households
For New Zealand firms already claiming the 15% credit — and those deterred by cash-flow lag or the coming software-cap cut — any rate lift or tighter targeting after PREFU will matter for tech, manufacturing and primary-sector innovation spend. Household disposable income and domestic demand would feel any durable bracket adjustment once surplus is booked.
PREFU on 29 September resets the numbers against which every party's costed tax promises will be judged before Parliament dissolves and voters go to the polls on 7 November. Fiscal discipline first, then targeted growth measures, remains the coalition's published sequence — and the binding constraint on what Willis can announce next.
