Personal income tax: what ukrainians need to know

Contents of the article

1. What is PIT?
2. What PIT rates apply in 2025?
3. Who pays PIT?
4. When must PIT be paid independently?
5. How and where to file a declaration?
6. PIT for sole proprietors (FOPs)
7. Where does PIT go?
8. PIT and military levy in 2025
9. Conclusions

 

Personal income tax (PIT) is one of the most important taxes in Ukraine. It is paid by nearly everyone: from employees to individual entrepreneurs, from landlords to deposit holders. In many cases, citizens do not even notice how this tax is automatically withheld from their income. However, in some situations, the individual must independently ensure the submission of a tax return and payment of the tax.

This article explains in simple terms when and how PIT must be paid, who is subject to it, what rates apply in 2025, when there is an obligation to file a tax return, and how all of this impacts the state and local budgets.

 

What is PIT?

Personal income tax is a nationwide tax levied on most types of individual income. Its purpose is to ensure the funding of the state and local communities’ budgets to cover essential public needs.

PIT is levied on the following types of income:

• salaries;
• income under civil-law contracts (e.g., services or subcontracting);
• rental income;
• dividends;
• interest on bank deposits;
• income from the sale of movable or immovable property;
• investment gains;
• inheritance or gifts;
• foreign income, etc.

 

What PIT rates apply in 2025?

The PIT rate depends on the type of income:

• 18% – a basic rate that applies to most income: wages, salaries, rent, income from deposits, prizes and winnings, etc.
• 5% – applicable to dividends received from Ukrainian companies that pay corporate income tax.
• 9% – applicable to dividends paid by foreign companies or by Ukrainian companies that do not pay corporate income tax.
• 0% – applies to inheritance or gifts received from close relatives.

Thus, in 2025, PIT ranges from 0% to 18%, depending on the source of income. Additionally, a military levy of 5% is often charged on top.

 

Who pays PIT?

In most cases, individuals are not required to independently calculate and pay personal income tax — this is done by so-called tax agents, namely:

• employers pay PIT on salaries;
• banks — when paying interest on deposits;
• Ukrainian companies — on dividend payments;
• legal entities and entrepreneurs — when renting property from you.

Such entities are required to withhold tax from the accrued income and remit it to the budget. This mechanism of tax withholding by a tax agent significantly simplifies compliance for individuals.

However, if you received income from another individual — for example, rented out an apartment, sold property, or received a gift from a distant relative — you must pay personal income tax yourself. This requires filing a tax return.

 

When must PIT be paid independently?

There are several life situations when an individual must file a tax return and pay PIT personally. Typically, this concerns income received from other individuals — such as renting out an apartment, selling property, or receiving a gift from a distant relative. In such cases, the tax rate and payment deadlines vary. Let us look at them in more detail.

1. Sale of property to another individual

If you sell real estate or a vehicle to another individual, the obligation to pay tax lies with you.

• Vehicle. In 2025, the sale of the first car in a calendar year is tax-exempt. If you sell a second or third car within the same year, PIT is charged at 5%, and in certain cases, at 18%. The tax return is filed after the end of the year, and the tax must be paid by August 1.
• Real estate. If you owned the apartment for less than three years and this is not your only sale in the year, PIT must be paid. If you sell an apartment owned for more than three years and it is your only sale during the year, PIT is not charged.

2. Renting out property

If you rent out an apartment or other property to another individual, you must pay PIT yourself. In this case, the standard 18% rate plus a 5% military levy applies.

• The tax must be paid quarterly — within 40 calendar days after the end of the quarter.
• The annual income declaration must be submitted by May 1 of the following year.

You are not required to register as a sole proprietor (FOP), but the law requires a written rental agreement. If you rent property to a legal entity or entrepreneur, the lessee acts as the tax agent and withholds PIT.

3. Receiving inheritance or gifts

• From close relatives (parents, children, spouse) — PIT is not charged.
• From a resident individual who is not a first- or second-degree relative — PIT is charged at 5% of the value of the inheritance or gift. In this case, the tax return must be submitted by May 1 of the following year.

4. Working abroad or receiving foreign income

If you earned income abroad (e.g., salary, dividends, rent), you must submit a declaration and independently pay PIT in Ukraine for 2025.
If tax has already been paid in the country of origin, a tax credit mechanism may be used — but only if there is a double taxation avoidance agreement between Ukraine and the source country.

5. Freelance or services without contract

If you provided work or services without an official contract and without payment through a tax agent — for example, worked as a freelancer via a foreign platform or received cash — you must declare the income and pay PIT yourself.

A late payment penalty for PIT is not cancelled during martial law and amounts to 10% of the unpaid tax.

 

How and where to file a declaration?

The personal income and asset declaration is submitted annually by May 1 of the year following the reporting year to the State Tax Service of Ukraine (STS), formerly known as the tax inspectorate. You can do this:

• Online — via the taxpayer’s electronic account on the website of the STS of Ukraine. An electronic signature (DSC) is required.
• In person or by mail — to the local office of the STS at your registered address.

 

PIT for sole proprietors (FOPs)

Sole proprietors (FOPs) under the general taxation system are required to:

• submit a tax return quarterly or annually;
• pay quarterly advance PIT payments;
• pay the final tax amount by August 1.

FOPs under the simplified taxation system do not pay PIT, but they must still submit declarations within the established deadlines.

 

Where does PIT go?

PIT is one of the main sources of local budget revenues. This tax finances a significant share of socially important services, including:

• educational and healthcare institutions;
• transport and road infrastructure;
• housing and utility services;
• social benefits and assistance.

In 2024, PIT revenues to local budgets exceeded UAH 257 billion. Every citizen who pays tax contributes to the development of their community.

 

PIT and military levy in 2025

In addition to PIT, most types of individual income are subject to a military levy. On December 1, 2024, the military levy rate was increased from 1.5% to 5%. Therefore, total tax deductions from most income types — such as salaries or deposit interest — amount to 23% (18% PIT + 5% military levy).
More about the taxation of deposit income can be found in our article Deposit tax.

 

Conclusions

PIT is a tax paid by the majority of Ukrainians, often without them realizing it. In most cases, everything is handled without your involvement — your employer or bank automatically withholds and remits the tax.

However, if you receive income from another individual and PIT has not been withheld, it is important to timely file a declaration and make the payment by August 1.

Understanding the key aspects of PIT — what it is, who pays it, when and at what rate — is not only a way to avoid penalties, but also a vital part of financial literacy.