What changes will occur for entrepreneurs starting January 1?

At the end of 2024, the Verkhovna Rada adopted, and President Volodymyr Zelensky signed a series of laws concerning the operations of individual entrepreneurs. This includes laws on "The Peculiarities of Taxation during Martial Law," "The State Budget for 2025," and amendments to the Tax Code and other acts aimed at stimulating the development of the digital economy.

ZAXID.NET explains what changes individual entrepreneurs should be prepared for to avoid complications.

Military Tax for Individual Entrepreneurs

From January 1, 2025, individual entrepreneurs of groups I, II, and IV must pay a military tax of 10% of one minimum wage as of January 1 of the reporting year – which amounts to 800 UAH.

Individual entrepreneurs in group III will pay a military tax of 1% of their income. This means 10 UAH for every thousand UAH earned starting January 1, 2025.

The military tax rate is also increasing for individual entrepreneurs under the general taxation system and for self-employed individuals. They will be required to pay 5% of their net income.

When Individual Entrepreneurs Should Pay Military Tax

The first advance payment for individual entrepreneurs of groups I, II, and IV must be made no later than January 20. Individual entrepreneurs of group III will pay based on their quarterly reporting – within 40 days after the end of the quarter.

The amount of the tax paid must be specified in the declaration regarding the single tax for the respective group.

Return of Mandatory Unified Social Contribution Payments

The law on the state budget for 2025 cancels the voluntary payment of the Unified Social Contribution (USC) by individual entrepreneurs. This payment will again be mandatory for all starting January 1.

The USC per month is at least 22% of the minimum wage. In 2025, this will amount to 1760 UAH.

Individuals can choose to pay a higher amount – this will affect the future state pension of the entrepreneur. However, the maximum base for USC calculation per month is 160,000 UAH (20 minimum wages), meaning the highest USC amount an individual entrepreneur can pay in a month is 35,200 UAH.

Who Will Continue to Receive USC Payment Benefits

In 2025, only the following can continue to voluntarily pay the USC:

• pensioners (no service time is accrued);
• people with disabilities (no service time is accrued);
• individual entrepreneurs who have a primary job with USC paid by the employer (service time is accrued).

Mobilized individual entrepreneurs can also refrain from paying the USC – their pension service time will be accrued if they receive financial support.

New Income Limits for Individual Entrepreneurs in 2025

In 2025, the minimum wage from which income limits for individual entrepreneurs under the simplified taxation system are calculated will be 8000 UAH. This is higher than on January 1, 2024, so the income limits for individual entrepreneurs will also increase.

The income limits for individual entrepreneurs in 2025 will be as follows:

• Group I (167 minimum wages) – 1,336,000 UAH;
• Group II (834 minimum wages) – 6,672,000 UAH;
• Group III (1167 minimum wages) – 9,336,000 UAH.

The annual income limit for individual entrepreneurs operating under the simplified taxation system is the maximum income they can earn within a year while remaining in their chosen group of single tax payers.

What to Do if Income Limits Are Exceeded

If an individual entrepreneur exceeds the established annual income limits, they can switch to another group of single tax payers or to the general taxation system, where the tax burden will differ. Additionally, a 15% single tax must be paid on the amount exceeding the limit.

The following transition scheme is possible if the annual income limit is exceeded:

• from Group I to II, III, or to the general system;
• from Group II to Group III or to the general system;
• from Group III only to the general system.

Tax Amounts for Individual Entrepreneurs in Different Groups in 2025

It is important to remember that individual entrepreneurs under the simplified taxation system also pay a single tax, the rates of which have not changed. For Group I, the single tax is 302.8 UAH, for Group II – 1420 UAH, for Group III – 5% of income or 50 UAH for every thousand UAH. If a Group III individual entrepreneur is a VAT payer, they pay a single tax of 3% of income plus VAT at a rate of 20%.

Thus, starting January 1, 2025, the tax burden on individual entrepreneurs under the single system will be as follows:

Group I – 302.8 UAH per month in single tax, 800 UAH per month in military tax, 1760 UAH per month in USC – totaling 2862.8 UAH per month (8588.4 UAH per quarter);

Group II – 1420 UAH in single tax, 800 UAH in military tax, and 1760 UAH in USC per month – totaling 3980 UAH per month (11940 UAH per quarter);

Group III – 5% of income in single tax, 1% military tax, and 1760 UAH in USC per month (5280 UAH USC per quarter + 60 UAH for each thousand UAH income during this period).

When Individual Entrepreneurs Should Pay Taxes

Similar to the military tax, individual entrepreneurs of groups I, II, and IV must make advance payments no later than the 20th of each month. Individual entrepreneurs of group III must pay taxes and contributions based on the results of each quarter.

Monthly Reporting

Starting in 2025, monthly reporting will be introduced for individual entrepreneurs with hired workers, if applicable. Previously, quarterly reporting was required.

The report for the IV quarter of 2024 must be submitted by the end of the quarterly reporting period (no later than February 10, 2025). The first monthly report for January 2025 must be submitted by February 20, 2025.

Additionally, there will be new forms for the single tax report – which will include information about the payment of military tax.

When to Submit Annual Declarations

Individual entrepreneurs operating under the simplified system must submit their annual declarations to the tax authority at their place of registration within the following deadlines:

• Groups I and II – within 60 days after the end of the reporting period, submit the single tax declaration – by March 1, 2025;
• Group III – no later than 40 days after the end of the IV quarter – by February 9, 2025;
• Group IV – by February 20, 2025.

Important Warning

Accountants servicing individual entrepreneurs advise against rushing to pay taxes in the early days of January and to wait a bit. This is due to the possibility of changes in payment details, which often occur at the beginning of the year.

It is also essential to prepare in advance for annual reports – check documentation, previous declarations, etc. This can save a lot of stress in the future.