New tax year ahead! Find out how much taxes individual entrepreneurs will pay in 2025 and who will qualify for tax benefits.
New Taxes for Individual Entrepreneurs on the General Taxation System
The income tax rate will remain the same as before, at 18%
So, what should individual entrepreneurs operating under the general taxation system pay to the state starting January 1, 2025?
First of all, it should be noted that the income tax rate will remain unchanged at 18%. However, the rate of the Unified Social Contribution (USC) will be 22% of the minimum wage, which is expected to remain at 8,000 UAH in 2025. This means that the USC will amount to 1,760 UAH monthly.
"It is important to note that with the introduction of martial law, there was an option for individual entrepreneurs to voluntarily pay the USC for themselves, but starting January 2025, the payment of the USC will again become mandatory," says Roman Mikhailovsky.
Additionally, starting in 2025, the military tax rate will increase to 5%.
Meanwhile, the rates for VAT, excise duties, property taxes, etc., will remain unchanged for the next year. At least, no proposals for changes to these taxes have been considered by parliament so far.
0 Changes for Simplified Taxpayers: What Taxes Will Individual Entrepreneurs Pay in 2025
Individual entrepreneurs on the simplified tax system will need to pay a single tax, military tax, and USC starting in 2025.
Group 1 individual entrepreneurs will continue to pay a single tax at a rate of no more than 10% of the subsistence minimum per month. Recall that Group 1 includes individual entrepreneurs who do not employ hired workers and engage in retail sales from trading places in markets and/or provide household services exclusively to the population.
Group 1 individual entrepreneurs will continue to pay a single tax at a rate of no more than 10% of the subsistence minimum per month.
The subsistence minimum for working individuals will remain at 3,028 UAH next year, which means a monthly payment of no more than 302.8 UAH. However, if an entrepreneur exceeds the income limit, the tax rate will be 15%. The income limit for Group 1 individual entrepreneurs is set at 167 times the minimum wage (1,185,700 UAH).
What about Group 2 individual entrepreneurs? Group 2 individual entrepreneurs in 2025 will pay a single tax at a rate of no more than 20% of the minimum wage per month, which amounts to no more than 1,600 UAH per month. The income limit for Group 2 is 5,921,400 UAH (834 minimum wages).
1 Group 3 individual entrepreneurs will pay a single tax at a rate of 5% of income, which remains unchanged compared to previous periods. The income limit for Group 3 is 1,167 minimum wages or 8,285,700 UAH.
Entrepreneurs from all three groups will also pay the military tax in 2025, which will amount to:
- 10% of the minimum wage for Group 1, 2, and 4 individual entrepreneurs (800 UAH per month);
- 1% of income for Group 3 individual entrepreneurs.
Thus, the military tax in 2025 will be 10% of the minimum wage established by law on January 1 of the tax (reporting) year, calculated on a monthly basis, which amounts to 800 UAH monthly. Individual entrepreneurs of the third group will pay the military tax at a rate of 1% of their income, with payments made quarterly.
The military tax in 2025 amounts to 10% of the minimum wage established by law on January 1 of the tax (reporting) year, calculated on a monthly basis, which is 800 UAH per month.
"In practice, this 1% military tax is added to the single tax rate in terms of administration and payment to the budget," explains the lawyer.
It should also be noted that individual entrepreneurs from Groups 1, 2, and 4 will need to pay the military tax no later than the 20th day (inclusive) of the current month.
"Such taxpayers can make advance payments of the military tax for the entire tax (reporting) period (quarter, year), but not later than the end of the current reporting year. Thus, the introduction of the military tax significantly increases the tax burden on citizens," adds managing partner of EvrikaLaw, Andrey Shabelnikov.
The mandatory payment of USC for all individual entrepreneurs under the single tax system will return in 2025 and will be 22% of the minimum wage, which amounts to 1,760 UAH per month.
Payroll taxes are increasing in 2025, as per the adopted bill No. 11416-d, all hired workers, except for military personnel, must pay 5% of income subject to personal income tax (PIT).
Payroll taxes are increasing in 2025, as per the adopted bill No. 11416-d, all hired workers, except for military personnel, must pay 5% of income subject to personal income tax. The military tax rate for military personnel is set at 1.5%. The rates for PIT and USC for hired workers remain unchanged: 18% (PIT) and 22% (USC).
2 Who Is Exempt from Paying the Military Tax
Group 1 and 2 individual entrepreneurs, whose tax address is located in areas of combat operations or temporarily occupied territories of Ukraine by the Russian Federation as of the date of the start of hostilities or temporary occupation, according to bill № 9319, have the right not to pay the military tax for the period starting from the first day of the month in which hostilities began in the respective territory, the possibility of hostilities arose, or temporary occupation of such territory began, until the last day of the month in which such active hostilities ceased or the possibility of hostilities ended.
"As is known, the adopted bill No. 11416-d regarding the historical increase in taxes contained significant shortcomings. Therefore, to address these issues, bill № 9319 was submitted to the Verkhovna Rada of Ukraine, which makes amendments to the tax increase law. Thus, according to this bill, the obligation to pay military tax for individual entrepreneurs is established not from October 1, 2024, but from January 1, 2025. Along with this, exemptions for individual entrepreneurs registered in temporarily occupied territories or in combat zones have been introduced. Therefore, after the relevant provisions come into force, this category of individual entrepreneurs will be exempt from paying the military tax.," noted Andrey Shabelnikov.
Thus, bill No. 9319 (currently awaiting the signature of President Volodymyr Zelensky) states that individual entrepreneurs — payers of single tax in Groups 1 and 2, whose tax address is located in areas of combat operations or temporarily occupied territories of Ukraine by the Russian Federation as of the date of the start of hostilities or temporary occupation, have the right not to pay the military tax for the period starting from the first day of the month in which hostilities began in the respective territory, the possibility of hostilities arose, or temporary occupation of such territory began, until the last day of the month in which such active hostilities ceased or the possibility of hostilities ended. The new law also exempts from paying the military tax Group 1 and 2 individual entrepreneurs who do not employ hired workers, but such entrepreneurs are exempt from paying the military tax only for a specific period, namely: for one calendar month per year during vacation, as well as for a period of illness lasting 30 or more calendar days, which is confirmed by an extract from the Electronic Register of Sick Leave.