How to calculate payroll in Ukraine in 2026: income tax, military levy, social contribution and an example

In Ukraine in 2026, net pay equals gross salary minus 18% personal income tax (ПДФО) and 5% military levy, i.e. 77% of gross when the employee has no tax social benefit. The employer adds 22% single social contribution (ЄСВ) on top. On a UAH 20,000 salary the employee receives UAH 15,400 and the employer spends UAH 24,400.

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Withholdings: 18% income tax and 5% military levy

Salary is taxed at 18% (para. 167.1 of the Tax Code). The base is gross salary reduced by the tax social benefit where the employee is entitled to it (para. 164.6). The military levy on employees' income is 5% (sub-para. 1.3, para. 16-1, subsection 10, section XX), in force since 1 December 2024 and unchanged in 2026. Its base is the income under Art. 163, so the benefit does not reduce it.

The employer, as tax agent, pays both taxes to the budget when the salary is paid, in one payment document with the payout (sub-para. 168.1.2).

Employer contribution: 22% ЄСВ

The employer charges 22% on the salary at its own expense (Part 5 Art. 8 of Law No. 2464-VI):

• Minimum contribution. If the monthly base does not exceed the minimum wage, ЄСВ is calculated on the minimum wage: 8,647 × 22% = UAH 1,902.34. The law makes exceptions, including work outside the main place of employment and contracts with non-fixed working hours.
• Maximum base. In 2026 ЄСВ is charged on no more than 20 minimum wages, UAH 172,940 a month (Art. 32 of Law No. 4695-IX), so the maximum contribution is UAH 38,046.80.
• Deadline. ЄСВ for a month is paid by the 20th of the next month, and with each salary payment the contribution on that payment is paid at the same time (Part 8 Art. 9 of Law No. 2464-VI).

Worked example

Three cases for a fully worked month, the third with the tax social benefit for a parent of two children under 18.

Monthly payroll calculation, 2026, UAH

The benefit in the third case is UAH 1,664 per child, UAH 3,328 in total. The income tax base is 8,647 − 3,328 = 5,319, so income tax is UAH 957.42. The military levy is charged on the full 8,647.

For a part month, the salary is divided by the scheduled working days and multiplied by the days worked: 11 of 22 days on a UAH 20,000 salary gives UAH 10,000 gross, UAH 1,800 income tax, UAH 500 levy, UAH 7,700 net and UAH 2,200 ЄСВ.

Advance and final payment: deadlines

Under Art. 115 of the Labour Code and Art. 24 of the Law on Remuneration of Labour, salary is paid at least twice a month, no more than 16 calendar days apart and no later than 7 days after the end of the period. Pay for the first half of the month is set by the collective agreement or the employer's internal act and cannot be less than pay for the time actually worked. The tax social benefit is applied to monthly income at the final calculation.

Tax social benefit: who qualifies

The tax social benefit reduces the income tax base on salary at one place of employment. In 2026 the basic benefit is UAH 1,664, i.e. 50% of the UAH 3,328 subsistence minimum for an able-bodied person (sub-para. 169.1.1, Art. 7 of Law No. 4695-IX). It applies only if monthly salary does not exceed UAH 4,660 (3,328 × 1.4, rounded to UAH 10; sub-para. 169.4.1). For a parent with two or more children under 18 the benefit is UAH 1,664 per child and the limit is multiplied by the number of children (sub-para. 169.1.2). Because the minimum wage exceeds UAH 4,660, a full-time employee without children does not qualify. The benefit is applied on the employee's application at one employer only (paras. 169.2.1, 169.2.2).

Payroll reporting: monthly from 2026

The payroll tax report shows income paid, tax withheld and ЄСВ charged. From 1 January 2026 legal entities file it for each month, within 20 calendar days after month-end; sole proprietors file quarterly with a monthly breakdown, within 40 days (para. 51.1, sub-para. "b" para. 176.2, sub-paras. 49.18.1–49.18.2, as amended by Law No. 4536-IX).

We prepare the report, payment orders and HR documents as part of calculation and payment of salaries. Indexation and average pay are covered in indexation and average pay calculations.

Common mistakes and penalties

• Applying the 1.5% levy: the general rate is 5%, and 1.5% remains only for service members and staff of the Armed Forces, the Security Service, the National Guard and other military formations (item 4, sub-para. 1.3, para. 16-1).
• Filing a quarterly report as a legal entity in 2026.
• Applying the benefit without an application or above the income limit; the employer then recalculates and recovers the shortfall from later pay (sub-paras. 169.4.2, 169.4.4).
• ЄСВ below the minimum contribution or above the maximum base; taxes paid after the salary.

A tax agent that fails to pay tax is fined 10% of the amount, 25% if intentional and 50% for a repeat intentional breach within 1,095 days (paras. 125-1.1–125-1.3). Unpaid or late ЄСВ carries a 20% penalty, or 10% when it was not paid together with the salary (items 2 and 6, Part 11 Art. 25 of Law No. 2464-VI).

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