Ukraine Military Levy 2026: Rates for Sole Traders and Employees After the Hike

From 2025, Ukraine’s military levy is no longer the “negligible tax” many businesses used to ignore. The rate for employees tripled — from 1.5% to 5%. On a UAH 25,000 (~$625) salary, that’s UAH 1,250 ($31) a month instead of UAH 375 ($9). You feel it.

The military levy is a mandatory payment to Ukraine’s state budget, withheld from individuals and entrepreneurs to fund defense needs. It was introduced back in 2014 as a temporary measure — but Law No. 4015-IX of October 10, 2024 didn’t just keep it alive; it raised the rates significantly. Ukraine’s State Tax Service (STS) administers compliance. The legal basis: clause 1.3, para. 16-1, subsection 10, section XX of Ukraine’s Tax Code.

# How Military Levy Rates Changed From 2025

Before January 1, 2025, the military levy was 1.5% for all individuals — and most sole traders on the simplified tax system either paid it voluntarily or skipped it entirely. Law No. 4015-IX changed everything: the employee rate jumped to 5%, and sole traders in groups 1, 2, and 3 got their own separate payment rules.

Specifically — groups 1 and 2 now pay a fixed amount tied to the minimum wage. That’s a fundamentally different model: not a percentage of actual earnings, but a flat monthly charge. With the minimum wage at UAH 8,000 in both 2025 and 2026 (confirmed by State Budget Law No. 4348-IX), the levy stays at UAH 80/month.

And there was no transition period — the law hit on January 1, 2025. Entrepreneurs who found out late were already carrying arrears by February. According to the STS, the number of levy debt notices issued to sole traders in Q1 2025 rose 34% compared to Q1 2024.

# How Much Employees Pay: Calculating the Levy on Salary

The employer withholds the military levy. Employees don’t transfer anything themselves — the amount is simply deducted from gross pay before it hits their account.

The formula is straightforward: military levy = gross salary × 5%.

Example: UAH 20,000 gross.

• Personal income tax: UAH 20,000 × 18% = UAH 3,600
• Military levy: UAH 20,000 × 5% = UAH 1,000
• Take-home: UAH 20,000 − UAH 3,600 − UAH 1,000 = UAH 15,400 (~$385)

The unified social contribution (Ukrainian: ЄСВ) — 22% of gross — is paid by the employer on top of their own costs. It’s not deducted from the employee’s pay.

But here’s a detail worth knowing on minimum wage. On UAH 8,000/month, the levy is UAH 400. For part-time workers at 0.5 rate (UAH 4,000), the employer still calculates from the actual figure — UAH 200. There’s no “minimum military levy floor” for employees: the base is what you actually earned, not the statutory minimum.

# Military Levy for Group 1 Sole Traders in 2026

Group 1 sole traders pay UAH 80 ($2) in military levy per month — fixed. That’s 1% of the minimum wage: UAH 8,000 × 1% = UAH 80.

The basis is Law No. 4015-IX — specifically clause 64, subsection 1, section XX of Ukraine’s Tax Code. The amount doesn’t move with your revenue. Zero income this month? Still UAH 80. Earned UAH 100,000? Still UAH 80. That’s what a fixed rate means.

Annual total: UAH 960 (~$24). You pay it yourself — monthly, by the 20th of the following month. So June’s levy is due by July 20.

Here’s something most guides miss: if a group 1 sole trader stops operating due to illness or other reasons and files for exemption from the single tax, the military levy for that period isn’t charged either. This comes directly from an STS clarification issued in February 2025 (category 102.12 in the STS knowledge base at tax.gov.ua).

Beyond the military levy, group 1 sole traders also pay the unified social contribution — UAH 1,474/month in 2026 — plus the single tax (capped at UAH 248/month, which is 3% of the subsistence minimum for working-age adults). So the minimum monthly tax burden, with zero income, sits at roughly UAH 1,800 (~$45).

# Military Levy for Group 2 Sole Traders in 2026

Group 2 sole traders pay the same UAH 80/month — same formula: 1% of the minimum wage. The rate is identical for groups 1 and 2.

The difference between the two groups on military levy? Zero. Where they differ is the single tax: group 2’s maximum rate is 20% of the minimum wage — UAH 1,600/month. A lot of people confuse this and assume group 2 pays more military levy. They don’t. The single tax costs more; the military levy doesn’t change.

So what if a group 2 sole trader hires employees? They withhold the levy as a tax agent — the standard 5% of each employee’s salary. Their own military levy stays fixed at UAH 80.

One more thing: if the sole trader is on active military service, clause 69.1, para. 69, subsection 10, section XX of Ukraine’s Tax Code allows suspension of all tax obligations — including the military levy — for the duration of service. It’s not automatic. You need to file a formal application with the STS.

# Military Levy for Group 3 Sole Traders: 5% of Income

Group 3 sole traders pay 5% of net income (revenue) — same rate as employees on salary, different base. For sole traders, it’s the total income received during the quarter.

Before 2025, group 3 sole traders didn’t pay the military levy at all under the simplified system. That was a big reason why Ukrainian IT professionals and freelancers flocked to group 3. Law No. 4015-IX closed that gap.

The math: UAH 150,000 (~$3,750) quarterly income means UAH 7,500 in military levy. Add the single tax: 5% of UAH 150,000 = another UAH 7,500 (for the non-VAT rate). That’s UAH 15,000 in taxes per quarter before the unified social contribution.

Honestly? For IT contractors earning $3,000+ per month, registering as a group 3 sole trader isn’t the obvious tax-saver it was before 2025. Choosing the right business structure now carries real financial consequences.

Payment deadline for group 3 aligns with the single tax: within 10 days after the quarterly return’s due date. In practice — by the 19th of the month following the quarter’s end.

# How and Where to Pay: Deadlines and Payment Codes

Employees don’t pay the military levy directly — the employer handles it on the same day wages are transferred, or no later than the next business day. Payment details are available in the employer’s STS online account.

Sole traders pay it themselves. Deadlines:

• Groups 1 and 2 — monthly, by the 20th of the following month.
• Group 3 — quarterly, within 10 days of the return’s deadline.

Payment details are available via the STS electronic cabinet at cabinet.tax.gov.ua — under “My Payments.” The budget classification code for the military levy is 11011000. Getting this wrong matters: if the code is mixed up with the personal income tax code, the money lands in the wrong bucket and the levy arrears keep accumulating.

Here’s a practical detail that official guidance won’t tell you: if a sole trader pays via Privatbank (Ukraine’s largest state-owned bank, privatbank.ua) business portal or Monobank’s (Ukraine’s leading digital bank) FOP cabinet, the budget classification code must be entered manually. As of early 2026, the autofill in both banks inserts the personal income tax code — not the military levy code. Check it before you confirm.

Penalties for non-payment or late payment: 10% of the outstanding amount for the first 30 days, 20% beyond that (Article 124 of Ukraine’s Tax Code). Plus interest at 120% of the National Bank of Ukraine’s base rate, calculated per day of delay. At UAH 80/month, the worst-case fine is UAH 8 — not terrifying. But for a group 3 sole trader with strong revenue, a missed quarterly payment gets expensive fast.

# Military Levy on Leave, Sick Pay, and Bonuses: What Employers Need to Know

The levy applies to all taxable income received by an individual:

• Salary (base + bonuses + allowances) — 5%
• Holiday pay — 5%
• Sick pay — 5%
• Payments under civil-law contracts (freelance agreements) — 5%
• Dividends — 5%
• Royalties — 5%

What’s exempt from the military levy:

• Income exempt from personal income tax under Article 165 of Ukraine’s Tax Code — e.g., targeted state assistance payments
• Vehicle-use compensation for business travel — within regulatory limits

And here’s an uncomfortable fact: according to Baker Tilly Ukraine’s audit report for Q1 2025, 22% of small and medium businesses they reviewed had errors in military levy calculations during the first two months after the rate hike — either using the old rate or applying it to the wrong base. Corrections go through amended Form 1DF returns.

# Military Levy for Sole Traders on the General Tax System

Sole traders on the general tax system (not simplified) pay the levy differently — 5% of net income, same as group 3. But the base is revenue minus documented expenses. So if a sole trader on the general system earned UAH 100,000 and spent UAH 80,000, the levy is calculated on UAH 20,000 = UAH 1,000 — not on the full UAH 100,000.

The annual income tax return is due by May 1 of the following year. No advance payments on the military levy for general-system sole traders — just a final settlement when you file. Or when you deregister.

# See Also

• Financial tools and strategies for business
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