Ukrainians' salaries will decrease. The MP explained what will happen to payments in 2025. However, the government will have funds for pensions next year. This was stated by President Zelensky himself. What will happen to the "minimum wage" and the subsistence minimum, should we expect pension indexing, and why will Ukrainians' salaries become smaller? This was reported by Kontrakty.UA.
This was shared in an exclusive interview with TSN.UA by Viktoriya Panchenko.
Salaries will decrease
All legal incomes of Ukrainians will fall due to the increase in military tax. This has already taken effect from December 1 following the enactment of the tax increase law. This was reported by MP Nina Yuzhanina, a member of the Verkhovna Rada's Committee on Finance, Taxation, and Customs Policy, during a broadcast on "Kyiv24". She explained that the net income "in hand" will be less. "Absolutely all incomes that you legally receive anywhere — whether at work as an employee or accrued interest on bank deposits — will be taxed at a military tax rate of 5% instead of the previous 1.5%."
Historic tax increase
Let me remind you that on November 28, Ukrainian President Volodymyr Zelensky signed a law on tax increases. The law regarding this historic tax hike was supposed to come into force on November 29. The text was even published in the online version of the parliamentary newspaper "Holos Ukrainy".
However, the document was later removed. Subsequently, Danilo Hetmantsev, the head of the Verkhovna Rada Committee on Finance, Taxation, and Customs Policy, announced that the law would take effect from December 1. The main changes include an increase in the military tax rate from 1.5% to 5% for all citizens' incomes. This decision is part of the government's efforts to finance defense expenditures. The profit tax rate for banks will rise to 50% for 2024. For individual entrepreneurs (FOP) on the simplified tax system, a military tax of 1% of income will be introduced for single tax payers of group III, while for groups I, II, and IV it will be 10% of the minimum wage. Previously, TSN Week host Alla Mazur also explained what would change in tax payments once the law took effect.
However, there are several citizens in Ukraine who are exempt from paying the military tax. In particular, in July 2022, President Volodymyr Zelensky signed a law granting exemptions to military personnel, specifically: the Armed Forces of Ukraine, the National Guard, and the Security Service of Ukraine. All other categories of citizens will not be exempt from the military tax.
"Minimum wage" unchanged
Let us remember that in 2025, the minimum wage will remain at 8000 hryvnias, while the subsistence minimum will be 2920 hryvnias. These figures are tied to the salaries of public sector employees and other social payments. Moreover, the draft budget for 2025 does not foresee salary increases for educators and healthcare workers. Instead, next year, salaries for prosecutors and judges will rise. The minimum wage for the upcoming year was approved by the Cabinet of Ministers of Ukraine during the adoption of the state budget draft for 2025. Finance Minister Serhiy Marchenko noted that the social sector is a priority. Therefore, its funding will remain stable. However, there are no discussions about increasing the minimum wage at this time.
"At this stage, and this has also been agreed upon with partners, we do not have the ability to raise social standards. This year, we increased the minimum wage by 19% - to 8,000 hryvnias".
The Cabinet approved by resolution on June 28, 2024, No. 751 "On Approval of the Budget Declaration for 2025 - 2027", that some social sector minimums will remain unchanged. This includes: minimum wage, subsistence minimum, and minimum pension. Hence, the next increase in these indicators may occur in 2028.
Funds for pensions are available
However, all pensions will be paid. This was stated by President Volodymyr Zelensky. He assured that funds for their payments are available in Ukraine. He made this statement on November 19 during a speech in the Verkhovna Rada.
Pension indexing
Notably, pension indexing will still occur in 2025. According to Lydia Tkachenko, an expert at the Institute of Demography and Social Research, pensions in Ukraine may increase by approximately 10-12% in March. However, even if pensions are raised in 2025, the changes will be insignificant for most pensioners. For instance, with a payment amount of 3000 hryvnias, a 12% increase will hardly be felt.
Pensions may be taken away
At the same time, in the draft state budget for 2025, the government proposes to withdraw funds from the bank accounts of pensioner IDPs registered before February 24, 2022, if they have not undergone identification. This means that Oschadbank will be obliged to transfer the remaining funds in the pension accounts of IDPs held at this bank back to the Pension Fund of Ukraine.
Additionally, pensioners abroad may undergo physical identification in November to confirm their right to a pension. The pension for these pensioners will be paid to current accounts in banks located on the territory of Ukraine, provided they complete physical identification by December 31 each year. Let us recall that the next pension indexing in Ukraine will take place in March 2025. Initially, pensions may be increased by 10 to 17%.
Work experience
The requirements for the minimum work experience for retirement in 2025 will also increase. If you wish to retire at 60, your work experience must be at least 32 years; at 63, it must be between 22 and 32 years; at 65, it must be at least 22 years. The later a pensioner retires, the higher the amount of monetary assistance. Therefore, the payment amount can be increased if retirement is deferred.
Pension reform
In 2025, Ukrainians will face two stages of pension increases: indexing in March and an increase in payments for some pensioners in the summer. However, an increase in social payments may occur following changes in legislation. This was stated by Minister of Social Policy Oksana Zholnovich during a telethon "Unified News".
According to her, the pension increase will most significantly affect Ukrainians who have long been retired. "They will all receive an increase. This will depend on the amount of the unified social contribution paid and their work experience. The minister also noted that large pensions will not be cut."
Zholnovich also announced a pension reform that should be adopted by the Verkhovna Rada.
Let us remind you that in 2025, pensioners, including Chernobyl victims, will receive additional allowances to pensions of over 2000 hryvnias.