Investment Boost on solar: what the 20 percent deduction is actually worth

What Investment Boost is

Investment Boost is an accelerated tax deduction for new depreciable business assets first available for use on or after 22 May 2025: deduct 20 percent of the cost in that income year, then depreciate the remaining 80 percent as you normally would (IRD). A new commercial solar system is a new business asset under the general rules, and there is no cap on value.

You will see this advertised by some installers as if it were a 20 percent discount on solar. It is not, and the difference matters to your cash flow. It is a deduction: it reduces taxable income, and its cash value depends entirely on your tax rate.

What it is actually worth, in dollars

Take a $250,000 system bought by a company paying the 28 percent rate. Investment Boost lets you deduct $50,000 immediately. That deduction saves $50,000 x 0.28 = $14,000 of tax in year one. The year-one cash value is therefore 5.6 percent of the project cost, not 20 percent.

Because the remaining 80 percent still depreciates (IRD's rate for solar power harnessing equipment and inverters is 16 percent diminishing value), Investment Boost is a timing benefit: more deduction now, less later, and the same total over the system's life. Net of the year-one depreciation the 20 percent replaces, the extra year-one tax cash for a company is about 4.7 percent of the cost over a full first year, or 5.5 percent if the system is commissioned in the last month of the income year. Timing benefits are real money; they are just not discounts.

Run it at your own cost and tax rate in our Investment Boost calculator, which shows both figures.

What qualifies and what does not

• Qualifies: new commercial solar systems, including panels, inverters, mounting and installation, first available for use on or after 22 May 2025.
• Qualifies: assets new to New Zealand, even if previously used overseas.
• Does not qualify: assets previously used in New Zealand, such as a second-hand local array.
• Does not flow to you under a PPA: the provider owns the asset and captures the deduction.
• Optional, asset by asset: the full 20 percent or nothing. Sell the system later for more than its tax value and the Boost is clawed back as depreciation recovery, like any depreciation.

That last point changes the financing comparison more than most marketing admits: a no-upfront-cost PPA hands the tax benefit to the provider. The financing guide runs loan versus PPA versus outright with the Boost included on the ownership side.

How and when you claim it

1. 01

   Commission the system

   The deduction lands in the income year the asset is first available for use, which for solar generally means installed, certified and able to run, not ordered.

2. 02

   Claim 20 percent in that year's return

   Your accountant claims the immediate deduction alongside normal depreciation on the remaining 80 percent of cost, in the depreciation boxes of the IR10. No separate notice to IRD is needed.

3. 03

   Depreciate the balance

   The remaining 80 percent depreciates at the applicable IRD rate from the same date. Keep the invoice split clean between the solar asset and any unrelated roof work.

We are not tax advisers and this is not tax advice: confirm treatment with your accountant. What we do is put the correctly framed figure, at your entity's rate, into every feasibility study and proposal, so the decision is made on true numbers. See where it fits in the wider picture in the commercial solar guide.