The Kremlin is raising taxes while shielding the groups on which its war effort depends. Part of the country’s income now hinges on the war continuing.

Russians finished voting on September 20, 2026. Barely four days later, their Ministry of Finance was presenting new tax proposals targeting investment income, purchases on foreign platforms and additional revenues earned by mining companies. The bill comes after the ballot.

These announcements—which deserve better than yet another prediction of Russian bankruptcy—show how a government can prolong a war while demanding more of its civilian economy, without making everyone worse off: war also generates orders, targeted wage increases and bonuses.

Even as it destroys lives, war redistributes income. Understanding its endurance requires examining both the resources it absorbs and the dependencies it creates.

After the Ballot, the Bill

In absolute terms, the growing burden is substantial as successive reforms take effect. In 2025, the standard corporate income tax rate rose from 20% to 25%. In January 2026, VAT increased from 20% to 22%. For 2027, the ministry proposes bringing investment income—dividends, interest and capital gains—previously taxed at 13–15%, under the progressive income tax schedule, whose top marginal rate reaches 22%. Investment income would thus face the same progressive rates as earnings from work. Dividends, bank interest and certain securities transactions or asset disposals will be affected. Four million taxpayers are about to see their tax treatment change. Mining companies will also be called upon to contribute, facing a 30% tax increase on certain additional revenues.

The Incomes of War, the Sacrifices of Others

The tax system does, however, distinguish between those it asks to pay more and those it seeks to shield: the income of those taking part in the war will be exempt from this extension. Such preferential tax treatment already entails a profound redistribution: according to the Atlantic Council, 65% of Russian regions were offering enlistment bonuses exceeding one million roubles in 2025. These are life-changing sums for households on modest incomes.

Military orders are also reshaping local prospects. According to the same study, manufacturing wages rose by 78% between February 2022 and February 2025 in the Sverdlovsk region, home to the tank manufacturer Uralvagonzavod. While this nominal increase, before adjustment for inflation, does not represent an equivalent gain in purchasing power, it reveals why the effects of war differ from one occupation to another, from one region to the next.

Outside these channels, pressures are steadily intensifying as military industries pull further away from a civilian economy verging on turmoil. Households that spend most of their budgets on essentials have little room to absorb the shock. Soaring pay in the arms industry thus coexists with deteriorating living conditions for those excluded, for one reason or another, from that sector.

Paying for War, Mortgaging the Future

Public finances are certainly under pressure, but apparently under control. The deficit will reach 3% of GDP in 2026, against an initial forecast of 1.6%. For 2027, the government projects revenues of 43.3 trillion roubles and expenditure of 48.8 trillion, leaving a deficit of 5.5 trillion roubles (€57 billion). In other words, the additional taxes will still leave a substantial financing requirement.

Ultimately, the Kremlin’s fiscal endurance rests on organising jobs and incomes around the war. Russia remains well able to pay for its war. The question is what Russians will have to forgo producing, consuming or investing in—for it to continue.