Mandatory payments for sole proprietors are being increased from January 1

From 1 January 2025, the “special wartime regime” for sole proprietors comes to an end: mandatory payment of social security contributions for themselves is reinstated, and in an increased amount. At the same time, other mandatory payments are also becoming more expensive, so many will start the year by revisiting their business model rather than just their New Year’s resolutions.

The state has set the minimum wage at 8,000 UAH, which means a minimum social contribution of 1,760 UAH per month for every entrepreneur, even with zero income. At the same time, the maximum base for calculating the contribution increases to 20 minimum wages (160,000 UAH), which is important for those who show high turnover or officially pay themselves large sums.

What exactly is increasing for sole proprietors
The key change is the mandatory payment of social contributions by all sole proprietors, without the benefits that applied during martial law. The minimum contribution is 22% of the minimum wage, that is 1,760 UAH per month in 2025.

For the single tax, the reference indicators remain the subsistence minimum and the minimum wage. The tax authorities have already published an infographic: for group 1 sole proprietors, the single tax is about 302.8 UAH per month (10% of the subsistence minimum for able‑bodied persons), plus 1,760 UAH of social contribution. For group 2, the single tax rate reaches about 20% of the minimum wage (around 1,600 UAH), which together with the social contribution results in more than 3,300 UAH of minimum monthly tax burden.

Additional “surprise” – the military levy
Another important point is the introduction of a mandatory fixed‑format military levy for sole proprietors. For group 3 entrepreneurs, the total monthly tax burden (social contribution + advance payments + military levy under the new rules) is already being estimated by experts as almost three times higher than in 2024 with the same level of income.

In practice, even in a “zero” month with no income, a sole proprietor will still have to pay at least the minimum social contribution, and for some categories also the military levy. This completely changes the logic of keeping “dormant” sole proprietorships, which previously cost their owners almost nothing.

Who is most at risk
The most vulnerable are group 1 sole proprietors with minimal turnover and seasonal businesses – small retail, household services, local markets. For them, an additional 500–800 UAH per month on top of their usual payments is often the line where maintaining a sole proprietorship stops making sense at all.

Group 2 sole proprietors also face significantly higher fixed costs and are forced either to raise prices or cut expenses (rent, staff, advertising). For group 3, especially in IT and creative industries, the increase is noticeable but relatively less critical in their income structure; however, the trend towards “equalising” them with employees is becoming obvious.

What this means for the market
Experts already warn about the risk of mass closures or “freezing” of sole proprietorships in 2025. The rise of fixed payments amid unstable demand is pushing some entrepreneurs either into the shadow economy or into informal self‑employment without registration.

An additional effect is the rise in service prices: part of the tax burden will inevitably be passed on to the final consumer. As a result, higher taxes and contributions become not only a fiscal, but also an inflationary factor.

What should be done now
The reaction “just pay more” is the worst option for a business without analysis. It is worth:
Recalculating the financial model, taking into account the new minimum payments (social contribution, single tax, military levy).
Assessing whether your current tax group is still appropriate, and considering switching groups or temporary closure.
Setting up a payment calendar to avoid penalties for late payments – especially for social contributions.
Reviewing pricing and cost structure so that the tax increase does not completely eat up your profit margin.

Author – Yuliia Popadyn, attorney in the tax and housing law practice of the WINNER Law Firm.

If you have questions or problems related to the correct calculation of taxes, payment of social contributions, or choosing the right tax group, feel free to ask for a detailed consultation – your situation can be broken down by numbers and explained in clear language to show which option will be most beneficial for you.