Legislative regulation of tax incentives and their psychological effectiveness in increasing personal well-being

Abstract

This study examines the complex relationships between the legislative regulation of tax incentives and their psychological effectiveness in promoting the personal well being of citizens, focusing on the Ukrainian context. At a time when most countries of the world are trying to balance fiscal needs and public welfare, tax incentives are increasingly used not only as economic tools, but also as mechanisms for influencing individual behavior and improving the quality of life. The article hypothesizes that in addition to material financial benefits, the psychological impact of well-designed and well-formulated tax incentives plays a crucial role in increasing the sense of security, motivation and overall satisfaction with the lives of citizens. In addition, the existing Ukrainian tax legislation regarding various benefits and support programs, such as housing, educational, medical and entrepreneurial benefits, is examined in detail, applying a mixed methodological approach. The authors of the article aim to identify discrepancies between the legislative intent of tax incentives and their actual psychological perception, highlighting areas where legal clarity, communication strategies and targeted policy adjustments can significantly enhance their positive effects on a person’s personal well-being. The result of the study is the formed proposals for the integration of behavioral economics and psychological knowledge into the formulation of tax policy, going beyond purely financial considerations to promote a more sustainable and satisfied society.