In 2025, the revenues of Ukraine’s municipalities exceeded UAH 554 billion—an increase of 12%, or UAH 59 billion, compared to the previous year. However, a significant portion of this growth is nominal: due to inflation, which stood at around 8% at the end of 2025, the increase largely only compensated for rising prices.

This is highlighted in the study «Analysis of municipality Budgets in 2025,» prepared by the Center for Public Finance and Public Administration Analysis at the KSE Institute.

Personal income tax (PIT), which accounts for 37.1% of total municipality revenues, increased by 17.2%. However, in many municipalities, this growth is not sufficient to outpace inflation. At the same time, in 36% of municipalities, PIT generates more than half of own-source revenues. Meanwhile, the 50 largest municipalities receive 56% of total PIT revenues.

The single tax is the second most important source of local revenue. In 2025, it increased from UAH 54.1 billion to approximately UAH 60 billion (+11.3%), accounting for about 15–16% of own revenues. This also indicates stabilization in the small business sector: turnover is growing, while the number of sole proprietors remains stable at around 2.17 million. At the same time, the situation is uneven: in 213 municipalities, single tax revenues actually declined—primarily in areas most affected by the war.

Excise tax revenues grew the fastest (+33.2%), driven by higher rates and increased fuel consumption.

Property tax revenues (+15.6%) are gradually strengthening, especially in smaller municipalities. Meanwhile, rent payments and non-tax revenues remain weak: non-tax revenues decreased by 2.3%.

The largest local budgets remain concentrated in the most economically developed regions. In 2025, the highest revenue volumes were recorded in municipalities in Dnipropetrovsk Oblast (over UAH 63.9 billion), Lviv Oblast (UAH 47.8 billion), Kyiv Oblast (UAH 42.9 billion), Kharkiv Oblast (over UAH 41 billion), and Odesa Oblast (around UAH 39 billion). Together, these regions account for nearly half of all local budget revenues in the country. Revenues are growing fastest in western regions, where a significant share of businesses has relocated: in Lviv, Ivano-Frankivsk, and Ternopil oblasts, by 18–21%.

Intergovernmental transfers amounted to UAH 168.1 billion (30.3% of total revenues) and grew more slowly than any other source, by only 4.7%. This suggests that municipalities’ own revenues are gradually strengthening. At the same time, the situation differs in frontline territories, where transfers effectively form the basis of local budgets and compensate for lost tax revenues.

Expenditures grew faster than revenues (+14.7%), with about 82.5% allocated to the public sector. Nearly half of all expenditures go to wages and related contributions. Capital expenditures are gradually recovering but remain low (around 17.5%), limiting investment. However, in some affected municipalities (particularly in Kharkiv Oblast), the share of capital expenditures can reach 55–66% of the budget. Overall, most resources are still directed toward maintaining the system rather than development.

Education remains the largest expenditure category, accounting for about 44% of total municipality spending. More than UAH 179 billion was allocated to teachers’ salaries in 2025. At the same time, the state’s share in education financing decreased from 75.4% in 2024 to 74.1% in 2025. 

Despite difficult conditions, some urban municipalities continue to build reserves (average balance—around UAH 80 million), although interest in placing funds in deposits is declining. Forecasts for 2026 are cautious: planned revenues are set at UAH 518.7 billion, which is 6% lower than the actual figure for 2025. This reflects a conservative planning approach, as a significant portion of transfers and capital expenditures is traditionally added during the year.

Overall, the financial landscape of local self-government is becoming increasingly uneven. Some municipalities—primarily in central and western regions—are gradually strengthening their economic base and demonstrating steady growth in own revenues. In contrast, in frontline territories financial stability largely depends on state support. In several cities, transfers account for more than half of total revenues, and the recovery of the local tax base remains dependent not on planning, but on the security situation.