Military Tax in Ukraine in 2025

The military tax has changed significantly since the beginning of 2025—rates have increased and the group of taxpayers has expanded. Changes have been made to both the calculation methods and payment procedures. It is especially important for business owners to understand the new rules in order to correctly calculate their tax liability and avoid penalties. In this article, we’ll cover all aspects of the military tax in 2025: who is required to pay, how the amount is calculated, when and where to make payments, and which categories are exempt from taxation.

What Is the Military Levy?

The military levy is a mandatory payment that was temporarily introduced on August 3, 2014, following the start of Russian aggression on Ukrainian territory. Its main purpose is to finance the needs of the Armed Forces of Ukraine, the Security Service of Ukraine, and other military units.

The legal basis for the levy is set forth in the Tax Code, specifically in paragraph 16–1 of subsection 10 of Section XX. The military levy in Ukraine is temporary in nature—it will remain in effect until the Verkhovna Rada’s decision on the completion of the Armed Forces reform takes effect. This status is confirmed by the fact that the levy is not included in the list of either national or local taxes and fees.

Significant changes to the law took place at the end of 2024. The Verkhovna Rada adopted Law of Ukraine No. 4015-IX of October 10, 2024, “On Amendments to the Tax Code of Ukraine and Other Laws to Ensure the Balance of Budget Revenues During the Period of Martial Law.” This document significantly expanded the scope of taxpayers and changed the tax rates.

Who Is Required to Pay the Military Levy

According to current legislation, those required to pay the military levy
in 2025 include:

1. Resident individuals who receive income from sources in Ukraine (salaries, proceeds from the sale of property, etc.) and from foreign sources (foreign income).
2. Nonresident individuals who receive income from sources in Ukraine.
3. Tax agents: legal entities or individual entrepreneurs who are required to calculate, withhold, and pay tax on behalf of individuals; employers when paying wages; companies when paying compensation under civil law contracts; and banks when paying interest on deposits.
4. Individual entrepreneurs (FOP) under the simplified tax system: first, second, and fourth groups (farming operations).
5. Third-group single-tax payers: individual entrepreneurs and legal entities.

It is important for businesses to understand that, as of January 1, 2025, all entrepreneurs, regardless of their tax group, are now required to pay the military levy.

The only exception is those who have been mobilized into the Armed Forces of Ukraine—they are exempt from payment for the entire duration of their service.

How to Pay the Military Levy

The procedure for paying the military levy depends on the payer’s category. Each group has its own rules, rates, and payment deadlines. Let’s look at each category separately.

Amount of the military levy for businesses

Military tax rates in Ukraine have changed significantly since 2025. They vary depending on the category of taxpayer. For individuals and tax agents:

• 5% of income—an increased rate that will remain in effect until December 31 of the year in which martial law is terminated (lifted);
• 1.5% of income — for military personnel and law enforcement officers.

For sole proprietors under the simplified tax system:

• 10% of the minimum wage — for sole proprietors in Groups 1, 2, and 4 (800 UAH per month in 2025);
• 1% of income received—for sole proprietors and legal entities in Group 3.

Let’s look at a sample calculation:

1. Individual entrepreneur (Group 1). Minimum wage as of January 1, 2025 — 8,000 UAH. Military levy rate — 10%. Monthly payment: 8,000 × 10% = 800 UAH. Annual amount: 800 × 12 = 9,600 UAH.
2. An individual entrepreneur in Group 3 with quarterly income of 200,000 UAH. The rate is 1%. The quarterly payment amount is: 200,000 × 1% = 2,000 UAH.

For legal entities under the general taxation system, when paying wages to employees:

• Through December 2024 — salary of 15,000 UAH → military levy of 225 UAH (1.5%);
• Starting in January 2025 — salary of 15,000 UAH → military levy of 750 UAH (5%).

The total tax burden on wages, including personal income tax, will be 23% in 2025.

Where to Pay the Military Levy

How to pay the military levy depends on the payer’s category:

Individual Entrepreneurs in Groups 1, 2, and 4:

• pay advance contributions by the 20th (inclusive) of the current month;
• may pay in advance for the entire tax period (quarter, year), but no later than December 31 of the current year;
• Advance contributions are assessed by the regulatory authorities.

Individual entrepreneurs and legal entities in Group 3:

• must be paid within 8 calendar days after the deadline for filing the quarterly tax return;
• For example, for the first quarter of 2025, the deadline for filing the tax return is May 12, and the payment is due by May 20.

Where should the military levy be paid? Payment details can be obtained from local State Tax Service offices or on the Tax Service’s official website.

All taxpayers must report the amounts paid in their tax returns. Sole proprietors in Groups 1, 2, and 4 report their payments in their annual tax returns, while sole proprietors in Group 3 report them in their quarterly single-taxpayer tax returns.

What types of income are exempt from the military levy?

The law provides for an exemption from the military tax—this applies to certain categories of income:

• government and social financial assistance;
• the cost of social services and rehabilitation assistance;
• pregnancy and childbirth benefits;
• child support;
• gifts and inheritances from first- and second-degree relatives;
• gifts whose value does not exceed 25% of the minimum wage (2,000 UAH in 2025);
• income from the sale of one apartment per year (if it has been owned for more than 3 years);
• Revenue from the sale of one car per year.

In addition, certain categories of individuals are entitled to additional benefits:

1. Military personnel and law enforcement officers—during martial law, their income in the form of monetary allowances for the period of direct participation in activities related to national security and defense is not subject to taxation.
2. Individual entrepreneurs in Groups 1 and 2 who do not employ hired workers are exempt from paying: for one calendar month per year during vacation, and for periods of illness lasting 30 or more calendar days (an extract from the Electronic Register of Sick Leave Certificates is required).
3. Individual entrepreneurs in Tax Groups 1 and 2 whose tax address is located in areas of hostilities or temporarily occupied territories are exempt from payment for the period from the first day of the month in which hostilities began to the last day of the month in which they ended.

These exemptions help reduce the tax burden on certain categories of taxpayers and protect socially vulnerable groups.

Conclusion

The military tax remains an important tool for financing Ukraine’s defense needs. The changes introduced in 2025 have significantly expanded the list of taxpayers and increased tax rates. It is important for businesses to take these changes into account when planning their cash flows and tax payments.

Timely payment of the military levy is not not only compliance with legal requirements, but also a contribution to strengthening our country’s defense capabilities. To simplify financial transactions in business, we at eDilo We offer an innovative online installment payment service for B2B transactions. Our service helps optimize cash flow—the seller receives the full payment amount on the day of the transaction, while the buyer pays in installments according to a set schedule. This is particularly relevant given the increasing tax burden, when businesses need to manage their financial resources effectively.

FAQ

What is the military levy rate in Ukraine for 2025, and have there been any changes compared to the previous year?

In 2025, the following military levy rates will apply:

• 5% of income for individuals (increased from 1.5%);
• 1.5% for military personnel and law enforcement officers;
• 10% of the minimum wage for sole proprietors in Groups 1, 2, and 4 (800 UAH/month);
• 1% of income for sole proprietors and legal entities in Group 3.

The main change is an increase in the tax rate from 1.5% to 5% for most taxpayers and the introduction of a military surtax for sole proprietors under the simplified tax system who were not previously subject to this surtax.

What tax returns must be filed regarding the military levy, and have the forms or the procedure for filling them out changed in 2025?

Individual entrepreneurs under the simplified taxation system in Groups 1, 2, and 4 must report their military tax payments in their annual tax return for 2025.

Individual entrepreneurs and legal entities in Group 3 must report the military levy on their quarterly single-tax payer tax return.

Employers and other tax agents report information on the military levy accrued and paid in the income report (tax calculation) using Form No. 1DF, which is filed quarterly.

The reporting forms remain unchanged, but relevant lines have been added to reflect the new military levy rates.

What penalties apply for nonpayment, late payment, or incorrect reporting of the military levy?

The following fines are imposed for violations of the rules governing the payment of the military levy:

• for sole proprietors in Groups 1, 2, and 4—50% of the military levy rate (400 UAH in 2025);
• For sole proprietors and legal entities in Group 3—5% of the unpaid amount for delays of up to 30 days, and 10% for delays exceeding 30 days;
• for willful nonpayment—25% of the unpaid amount; for a repeat violation—50%;
• For tax agents—10% of the amount of the levy due; for an intentional violation—25%; for a repeat violation—50%; and for a third and subsequent violations—75%.

In addition to fines, a late payment penalty is assessed on the amount of the tax debt for each day of delinquency.

Are there likely to be changes to the legislation regarding the military levy in 2025, and how can businesses keep track of these changes to respond in a timely manner?

Changes to the legislation regarding the military levy are possible in 2025, especially given the temporary nature of the increased rates, which remain in effect until martial law is lifted.

Businesses are advised to:

• Check official sources regularly: the website of the Verkhovna Rada of Ukraine and the State Tax Service;
• subscribe to newsletters from tax authorities;
• use the services of qualified accountants or lawyers;
• use specialized accounting software and services that are promptly updated in accordance with changes in the law;
• participate in professional webinars and seminars on tax-related topics.

In the event of significant changes in the law, tax authorities typically launch an information campaign and provide guidance to taxpayers.