Trump’s “Big Beautiful Bill”
WHAT IT COULD MEAN FOR NZ INVESTORS
U.S. President Donald Trump is making headlines again, not just for his campaign, but for a sweeping new tax proposal nicknamed the “One Big Beautiful Bill.” While it’s mainly aimed at reshaping U.S. tax policy, New Zealand investors with U.S. assets could feel the impact, especially when it comes to dividends and interest income.
HIGHER U.S. TAX ON YOUR INVESTMENT INCOME
A key part of the bill (known as Section 899) introduces new surtaxes on income flowing from the U.S. to countries the U.S. views as having “unfair” tax systems. Unfortunately, New Zealand is expected to be on that list due to new international tax rules we’re adopting in 2025.
If passed, this could mean:
DIVIDENDS:
- Currently: NZ investors in U.S. shares typically pay 5–15% U.S. tax on dividends, thanks to a long-standing treaty.
- Under the new rules: That rate could climb by 5% per year, up to 25–35% over time.
- Effect: Lower net returns on popular U.S. investments like Apple, Microsoft, or S&P500 ETFs.
INTEREST INCOME:
- Currently: Most interest (like U.S. bonds or treasuries) is tax-free for NZ investors due to a special exemption.
- Under the new rules: This exemption could be removed, meaning U.S. interest payments might also face up to 25% tax.
- Effect: Returns on U.S. fixed-income investments could take a hit.
WHAT SHOULD INVESTORS DO?
It’s important to note this bill hasn’t passed yet and it is still working its way through the U.S. Senate. But the message is clear: U.S. tax rules may become less friendly for foreign investors.
HERE’S HOW TO STAY AHEAD:
- Review your U.S. exposure: If you hold U.S. shares or bonds, check how much income comes from them.
- Keep tax in mind: Higher U.S. taxes could lower your effective yield.
- Diversify smartly: Global investments, especially outside the U.S., may become more appealing.
- Stay informed: We’ll continue monitoring this legislation and update you as it evolves.
NEED HELP REVIEWING YOUR PORTFOLIO?
As always, we’re here to help you navigate these changes and make sure your investments remain well-positioned whatever happens in Washington.
