The Cabinet of Ministers of Ukraine has submitted an updated draft State Budget for 2026 to the Verkhovna Rada. This document takes into account proposals of the Parliament and outlines the state’s main financial guidelines in the context of war and recovery.

Following the adoption of the Budget Conclusions (Resolution No. 4650-IX, dated 22 October 2025) by the Verkhovna Rada, the Government prepared and submitted an updated draft law on the State Budget for the second reading within the 14-day period stipulated by Article 158 of the Verkhovna Rada Regulations. Although these deadlines were missed, the Cabinet of Ministers completed its task by 3 November.

Changes for local self-government

Ihor Onyshchuk, expert for the Swedish-Ukrainian programme Polaris ‘Supporting Multilevel Governance in Ukraine,’ highlighted key provisions relating to local budgets:

• PIT: the proposal to increase the share of tax transfers to local budgets from 60 to 64% has not been taken into account.
• Debt on tariffs: the Government has left only the current compensation – UAH 15.2 billion, without repaying the previous debt.
• Data for subsidies: basic and reverse subsidies will be calculated based on the 2021 Ukrstat population figures. By 1 April 2026, the CMU and regional state administrations must update the State Migration Service of Ukraine's data to ensure fair equalisation from 2027 onwards.
• The basic subsidy has been reduced by UAH 4.1 billion.
• The remaining educational subsidies will be transferred to a special state budget fund for further distribution by the Government.
• A new model for paying teachers’ salaries – taken into account, starting on 1 September 2026.
• Increase in salaries for teachers and scientific and pedagogical staff of higher education institutions – taken into account (+UAH 6.6 billion).
• Optimisation of the network of budgetary institutions, particularly in education, based on demographics and the situation in frontline regions.
• Subsidy to Slavutych increased to UAH 100 million (+UAH 25 million).
• Public investment projects:
  • UAH 527.9 million – for the reconstruction of the Kharkiv Regional Children’s Clinical Hospital with a shelter;
  • UAH 500 million – for the restoration of the educational capacity of universities.

Additional proposals taken into account

• Compensation for military losses incurred by businesses – UAH 1 billion.
• Support for farmers – compensation for the cost of domestic vehicles and equipment.
• UAH 250 million – a new rehabilitation programme for children of military personnel, internally displaced persons, veterans and families of those killed in combat.
• UAH 1.5 billion – for housing for internally displaced persons (+UAH 500 million).
• UAH 13 million – for the development of sports for persons with disabilities.

Partially taken into account

• Humanitarian demining – UAH 1 billion instead of UAH 2 billion.
• Educational subsidy – updating the approaches to teachers’ remuneration from 1 January 2026.
• Social services – clarified without detailing inclusive education.
• UAH 50 million – for medicines for patients with rare diseases.
• UAH 5.2 billion – redistribution of subsidies to de-occupied communities to support those where hostilities continue.

Not taken into account

• Increase in military pay.
• Privileged VAT on electric vehicle imports.
• Increased funding for the Ministry of Veterans Affairs, Ministry of Defence, Security Service of Ukraine, and other security agencies.
• Support for farmers (UAH 9.5 billion has already been allocated for 2026).
• Reconstruction of the State Border–Mostyska–Sknyliv railway line.
• Funding for the remembrance and resilience programmes of the Ministry for Development.
• Development of inland waterways.

New interbudgetary rules: focus on war-affected communities

For the first time, a separate subsidy has been introduced for communities affected by ongoing hostilities: 5 per cent of projected personal income tax revenues, or UAH 5.2 billion. This will enable communities with no income of their own due to the war to meet their basic needs.

Although the total amount of interbudgetary transfers has decreased by UAH 2.19 billion, support for education, healthcare, social protection and housing programmes for internally displaced persons has been maintained.

Social priorities

The budget focuses on human capital:

• a 50 per cent increase in teachers’ salaries during 2026;
• modernisation of the education network, based on demographics and safety;
• a new system of remuneration for teachers from 1 September 2026;
• expansion of social services programmes for children with disabilities.

Other provisions include:

• UAH 250 million – for the rehabilitation of children of military personnel, internally displaced persons, and veterans;
• UAH 13 million – for the development of sports for people with disabilities;
• +UAH 50 million – for the purchase of medicines for patients with rare diseases.

Macroeconomic framework

The 2026 Budget is based on an increase in the income tax rate for banks, from 25 to 50 per cent. This will increase state revenue by UAH 30.6 billion, some of which will be allocated to a special investment project fund (including UAH 4.3 billion for the purchase of passenger carriages).

• Total revenue – UAH 2.9 trillion.
• Expenditure – UAH 4.8 trillion.
• The maximum amount of public debt has been increased by UAH 5.36 billion (new loans from the World Bank and the EIB).

The revised Budget remains socially oriented and balanced between wartime realities and recovery tasks.

Final stage

The updated State Budget 2026 marks a significant milestone in the budget process. It is scheduled for adoption in the second reading by 20 November.

Ultimately, the country’s financial framework for 2026 will depend on the support that the revised document receives from the Parliament.