Rank #30 · Middle East
Iran's officially reported 2025 defense spending was $7.4B per SIPRI (a 5.6% real-terms decline, the second consecutive annual fall), but actual military expenditure is widely believed to be 2-3x larger once IRGC, nuclear program, and proxy support are included. Iran is currently under an indefinite ceasefire with the US and Israel following the February-April 2026 Operation Epic Fury / Roaring Lion campaign, with Pakistan-mediated talks ongoing.
Iranian defense budgeting is among the most opaque in the world. SIPRI's $7.4B 2025 figure reflects publicly reported Artesh and IRGC line items but understates true expenditure: substantial portions of IRGC activity (especially Aerospace Force and Quds Force), nuclear-program spending (under the Atomic Energy Organization), and proxy financing (Hezbollah, Houthis, Iraqi militias) are off-budget or buried in non-defense ministries. Independent estimates including these flows range $15-25B. The 5.6% real-terms decline in 2025 reflects compounded sanctions pressure, oil-revenue volatility, and rial depreciation. Allocations are weighted toward IRGC over Artesh, reflecting regime power dynamics.
Iran maintains two parallel militaries: the Artesh (regular armed forces, ~350,000 active across Army, Navy, Air Force, Air Defense) and the IRGC (Islamic Revolutionary Guard Corps, ~190,000 active in IRGC Ground Forces plus IRGC Navy and IRGC Aerospace Force, the latter responsible for ballistic and cruise missiles and drones). The Quds Force handles foreign operations and proxy support. The Basij is a paramilitary mobilization force. Equipment is dated and heterogeneous: F-4, F-5, F-14A Tomcat, MiG-29, and Su-22 in Air Force service, with newly delivered Russian Su-35s entering service in 2024-2025. Domestic missile and drone production (Shahed, Fath, Kheibar Shekan) is the regime's most consequential capability, demonstrated in 2024 strikes on Israel and against US forces in 2026.
Iran has built a substantial indigenous defense industrial base under sanctions, concentrated in DIO (small arms, armor, ammunition), AIO (ballistic missiles, satellites, space launchers), and IAIO (aircraft and engines). Drone production has become Iran's most strategically significant export: Shahed-136/131 loitering munitions have been transferred at scale to Russia for use against Ukraine, and to the Houthis, Iraqi militias, and Hezbollah. Ballistic and cruise missile production includes the Kheibar Shekan, Emad, Sejjil, and Fath-360 systems. Iran-Russia defense cooperation deepened in 2024 with Su-35 deliveries and a 2025 strategic partnership treaty. Imports include Russian aircraft and air-defense components and Chinese subsystems.
Iran is in an unprecedented military situation as of May 2026. Operation Epic Fury (US) and Operation Roaring Lion (Israel) ran February 28 - April 8, 2026, striking over 10,000 targets across Iran including missile and drone sites, IRGC facilities, naval assets, and command infrastructure. On April 8, 2026 a two-week Pakistan-mediated ceasefire was agreed; Trump subsequently extended it indefinitely. Talks are channeled through Islamabad. Iranian proxy networks were severely degraded in the preceding 18 months: Hezbollah (Israel's 2024-2025 campaign), Hamas (post-October 2023), and the Houthis (sustained US strikes 2024-2026). Sanctions regime expanded April-May 2026 covering Chinese and regional facilitators.
On April 27, 2026 SIPRI placed Iran's 2025 spending at $7.4B (-5.6% real, second consecutive decline). Operation Epic Fury (Feb 28 - Apr 8, 2026) involved over 10,000 strikes per CENTCOM. The April 8 ceasefire was mediated by Pakistan's PM Shehbaz Sharif and announced by Trump on Truth Social; subsequent extensions made the ceasefire indefinite as of May 5 ("Operation Epic Fury is over" — Sec. Rubio, May 5, 2026). Iran sent a substantive response to the US proposal via Pakistan on May 10, 2026. New US/EU sanctions targeting Chinese and Middle Eastern facilitators of Iranian oil sales were imposed in late April 2026. The Strait of Hormuz, briefly closed during the war, reopened in mid-April 2026.
SIPRI's 2025 figure is $7.4B based on the official budget. Independent estimates that include IRGC off-budget activity, nuclear program spending, and proxy financing typically range $15-25B. Multiple Iranian rial exchange rates and sanctions-driven opacity make precise figures impossible. Treat any single number as an estimate.
The Artesh is Iran's regular professional military (Army, Navy, Air Force, Air Defense). The IRGC (Islamic Revolutionary Guard Corps) is a parallel ideological force established 1979, with its own ground forces, navy, aerospace force (missiles and drones), and the Quds Force (foreign operations). The IRGC controls Iran's most strategically significant capabilities and large parts of the economy.
A ceasefire has been in place since April 8, 2026, mediated by Pakistan and extended indefinitely. Sec. Rubio stated on May 5, 2026 that "Operation Epic Fury is over." Talks on a lasting agreement are ongoing through Islamabad. The conflict is paused but not formally concluded; sanctions remain in place and have been expanded.
Iran is not a confirmed nuclear-weapons state. As of early 2026 the IAEA had documented enrichment to 60% U-235 — short of weapons-grade 90% but well above any civilian need. Operation Epic Fury struck multiple nuclear facilities including Fordow and Natanz. The post-ceasefire scope of remaining Iranian nuclear capability is a primary subject of the Islamabad talks.