Latvian special operations forces climb and clear a flight of stairs in a simulated urban environment during an exercise on Camp Grayling, Michigan, in 2023. Latvia is, behind Poland and Lithuania, the third largest defense spender in NATO on a per capita basis, according to the alliance. (Drake Chandler/U.S. Army National Guard)
STUTTGART, Germany — Defense spending among NATO allies will increase by more than 15% in 2025, the second largest annual jump in more than a decade as collective expenditures rise to $1.6 trillion, according to new alliance figures.
NATO, in an update released last week, said 31 of 32 member states will hit the required benchmark that calls for dedicating 2% of gross domestic product to military matters. Iceland, which was admitted into NATO in 1949 because of its strategic location, doesn’t maintain armed forces and was excluded from the report.
For NATO, the surge pushes spending to historic levels and comes as allies move toward an even higher spending target. In June, member states agreed that the minimum level must rise to 5% of GDP by 2035, in line with President Donald Trump’s priorities.
The plan calls for 3.5% of GDP to be directed to traditional priorities such as weapons and troops, while 1.5% of GDP would go to related infrastructure.
Estonian soldiers set up and occupy an overwatch location with a .50-caliber machine gun, during an exercise with U.S. Army soldiers near Camp Tapa Estonia, in January 2024. Estonia is one of the biggest defense spenders in NATO on a per-capita basis. (H Howey/U.S. Army)
NATO has not detailed what precisely would qualify as viable military public works projects, but some analysts have raised concerns that the metric could be used to inflate defense budgets by directing money to initiatives without a clear military purpose.
Some members are already looking at the infrastructure improvements as a means for boosting their NATO defense spending levels.
For example, Italy plans to construct a bridge that connects Italy’s southern mainland to the island of Sicily. The move would ease civilian travel but also enhance military maneuvering in a country with thousands of U.S. and allied troops, project advocates say.
The United States remains by far the biggest defense spender, accounting for well over half of overall military investments in the alliance in 2025, according to NATO.
However, on a per-capita basis, the U.S. came in sixth place behind Poland, Lithuania, Latvia, Estonia and Norway. Twenty-four member states still spend under 3% of GDP, which means they’ll have to sharply increase spending to reach the 5% mark in the next decade.
A Polish W-3 Sokol helicopter soars overhead during a simulated battle at Bemowo Piskie Training Area, Poland, July 12, 2025. Poland is the biggest defense spender in NATO on a per-capita basis, according the the alliance. (Jacob Suess/U.S. Army)
Current spending signifies a major turnaround from where NATO was in 2014, when it first agreed to the 2% level. That year, collective spending decreased across the alliance by roughly 1%, NATO data shows.
Russia’s 2014 armed intervention in Ukraine brought on new urgency inside NATO. In subsequent years, spending gradually increased.
But it was Russia’s full-scale attack on Ukraine in 2022 that delivered a major jolt.
NATO defense spending rose 9.3% in 2023 and 18.6% in 2024 amid concerns about further Russian aggression in Europe. The annual overall spending increase for 2025 was 15.9%, down slightly from the previous year’s annual boost but still larger than at any other time in recent NATO history.
