The government plans to sharply increase tax collections on Russians’ bank deposits to reduce the budget deficit, of which every third ruble will go toward military spending. In 2027, revenues are expected to reach a record 1.02 trillion rubles, according to the explanatory note to the draft federal budget. This is 1.6 times more than the state will receive from this item in 2026 (631.9 billion rubles).
The government introduced a tax on bank deposits during the COVID-19 pandemic. Russians were supposed to begin paying it in 2022, but authorities postponed the deadline several times. Ultimately, the first payments weren’t received until 2024. The total amount was 110.7 billion rubles. The following year, interest rates and deposit sizes increased significantly, and the budget received three times that amount: 320.2 billion.
Personal income tax (PIT) is levied on a portion of interest earned on deposits, not the entire amount. The non-taxable base is calculated as 1 million rubles plus the maximum Central Bank of Russia rate for the reporting year. For example, in 2025, with the Central Bank rate at 21%, income on all deposits of 210,000 rubles is exempt from tax. If the interest earned is above this threshold, PIT is levied on the income.
Starting next year, the government plans to extend the progressive personal income tax rate to bank deposits, levying 13-22% instead of 13-15%. This will occur by including deposit interest in an individual’s overall income. The same will apply to income from the sale of securities and dividends on shares. The Ministry of Finance noted that the changes will affect no more than 6% of taxpayers, or approximately 4 million citizens.
The government also submitted amendments to the Tax Code to the State Duma, which will change the administration of deposit taxes starting in 2026. Specifically, banks will begin withholding personal income tax immediately upon payment of deposit interest, subject to the tax-exempt limit. Currently, the tax is payable separately by December 1st. However, it is paid for the previous year. The new approach stipulates that a portion of the tax will be withheld in the same year in which the interest was earned.
At the same time, the Federal Tax Service will calculate the total interest income on individual deposits in all banks and notify of additional tax payments, if required. The tax amount withheld will need to be paid in person according to the old procedure—by December 1 of the year in which the notification is received.
The federal budget deficit is expected to reach 5.5 trillion rubles in 2027, or 2.2% of GDP. This is almost double the previously projected 3.2 trillion rubles. This figure will increase due to a 6% increase in expenditures, reaching 48.8 trillion rubles. Moreover, every third ruble in the budget will go toward military spending. The “national defense” budget line item will increase from 12.9 trillion rubles this year to 17.1 trillion, and the cumulative total for the 2027-2029 period will reach 50 trillion rubles.
(c)THE MOSCOW TIMES 2026