Kremlin Shifts War Burden onto Citizens: New Tax Imposed on Russians
Amid ongoing conflict dynamics that have further strained Russia’s economy, the authorities have approved a new financial measure aimed at bolstering the state’s budget through citizen contributions.
According to the Ukrainian Foreign Intelligence Service, as of September 25, the Russian government has introduced a mandatory tax on income from bank deposits for the year 2024.
This initiative is part of a broader effort to mobilize domestic funds to cover escalating military expenses directed against Ukraine and other strategic targets of the Kremlin.
The taxation applies to interest earned on deposits: the standard rate is set at 13%, while individuals earning over five million rubles annually (approximately $59,000) will face an increased rate of 15%.
Starting from 2025, there are plans to shift towards a progressive tax system, culminating in a maximum rate of 22% by 2026.
This measure represents a clear attempt to replenish the heavily depleted budget, which has been strained heavily due to military expenditures.
For comparison, in 2023 alone, this tax generated about 111 billion rubles (roughly $1.31 billion) for the Russian treasury.
Additionally, the Ministry of Finance has submitted a draft budget for 2026–2028, projecting an increase in VAT from 20% to 22%, with the additional revenue earmarked for military and security sector needs.
Meanwhile, Ukraine’s budget deficit by September 2025 averaged 22.9% of GDP — lower than in 2023–2024 but still significant.
The forecast for 2026 anticipates the deficit shrinks to 18.8% of GDP, though it remains high compared to peaceful country standards.
Further details on 2026 fiscal plans appear in Tatiana Bogdan’s article, “Funding Budget Deficits in 2025 and 2026 — From Rain to Gutter,” which analyzes the ongoing economic challenges faced by Russia.