In 2025, changes to the military levy came into effect in Ukraine, which now amounts to 5% instead of the previous 1.5%. This decision, which was made against the backdrop of the extension of martial law, is aimed at covering defense costs and financing the Armed Forces of Ukraine. The new rates will be in effect until the end of martial law, after which the tax should return to its previous level.
Who will pay military duty and how?
Military duty is now levied on various types of income, including:
- Salary : both basic and additional, including bonuses, sick pay and other benefits.
- Income from the sale of property : real estate or movable property, if this is not the first transaction in the year.
- Property rentals , royalties , dividends and bank interest .
- Royalties and inheritance (except those received from close relatives).
For sole proprietors, the rate depends on the selected group:
- The first, second, and fourth groups pay 10% of the minimum wage.
- The third group – 1% of income.
What has changed for property transactions?
Until now, if citizens sold their first apartment or car in a year, these transactions were not taxed with military duty. However, after the introduction of new rates, if they sold a second apartment or car in a year, they would have to pay 5% military duty. For the third transaction, it would be 18% personal income tax and 5% military duty. This also applies to the sale of equipment, including trucks, buses or special vehicles.
What is not taxable
Maternity benefits, subsidies, alimony, business trips, and small gifts are exempt from military levy. Military personnel and law enforcement officers do not pay this tax on their salaries, but they must pay it on income received from the rental or sale of property.
Experts suggest that the increase in the military levy rate could significantly affect the rental market, particularly in regions where rental prices are pegged to the dollar. There is a possibility that part of the rental market could return to the “shadow” to avoid paying taxes. This could lead to a decrease in legal rental payments and losses for the state budget.
Increasing the military levy creates an additional financial burden for many Ukrainians, but at the same time it will help provide the necessary revenue to the budget to finance the country's defense in times of war. However, it is important that the system is properly configured and does not lead to an increase in unofficial payments or tax evasion.
