The object is the budget mechanism of the state. The purpose is to substantiation of the theoretical and methodological dominants of formation and functioning of the budget mechanism of the social and economic development of the state and development of scientific and practical recommendations regarding the vectors of modernization of the said mechanism in the conditions of social and economic transformations. The methods are dialectical, systemic, institutional, theoretical and multiple approaches, methods of analysis, synthesis, induction, deduction, abstraction, analogy, theoretical generalization, modeling, observation, measurement, comparison, empirical description, formalization, ascent from abstract to concrete and from concrete to abstract, interval analysis of data, mathematical, statistical, systematic and functional, functional and structural, complex, graphic. The results –the theoretical and methodological regulations, scientific and methodical approaches to the study of the formation and functioning of the budget mechanism of social and economic development of the state and practical recommendations concerning its modernization in the context of ensuring the inclusive sustainable development of Ukraine. Novelty – further development of conceptual approaches to the identification and justification of allocation, regulatory and preventive effects from the implementation of the distribution and control functions of the budget as an economic category has been gained; the definition of the term «budget resources» has been clarified, in which emphasis has been made on the sources of their formation, purpose and form of existence; the methodological approach to the study of the budget mechanism of social and economic development of the state, based on financial theory and philosophical knowledge of budgetary relations has been developed, it envisages consideration of this mechanism through the prism of laws and categories of dialectics using the methodological tools of the theories of institutionalism and systems; the complex theoretical and methodological approach to the disclosure of the essence of the budget mechanism of social and economic development of the state has ben formed, in particular as: systems and institutions; developed scientific approaches to the identification of the principles of the formation and functioning of the budget mechanism of social and economic development of the state; the conceptual bases of management of budget resources have been improved through the introduction of inclusive and oriented budgeting technology and the categorical and conceptual apparatus of financial theory has been supplemented by the definition of «inclusive and oriented budgeting»; an interval model of state budget revenues dynamics has been worked out, based on the theoretical multiplicity approach and analysis of interval data, and it allows to improve forecasting of budget revenues; scientific and organizational approaches to optimizing the use of budget resources have been improved; further developed a scientific and methodological approach to improving the collection of personal income tax on the application of the developed progressive scale of tax rates has been gained, which envisages differentiation of taxpayers depending on the value of taxable income with the establishment of different rates of income tax of individuals; the theoretical and methodical approach to planning of the state budget expenditures on social protection has been improved, which envisages the change in the order of appointment of state aid at the birth of a child, taking into account the size of the actual living wage; the scientific and methodological principles of budgetary regulation have been improved, which are based on the phased application of instruments of such regulation and evaluation of its effectiveness on the basis of determining the indicator «level of availability of budget resources delegated by the state authorities to local self-government bodies». It was introduced into the activities of the Committee of the Verkhovna Rada of Ukraine on Budget, the Ministry of Finance of Ukraine, the Ministry of Social Policy of Ukraine, the Territorial Administration of the Accounting Chamber of Ukraine in Lviv, Volyn, Rivne, Ternopil, Ivano-Frankivsk and Transcarpathian regions, the Finance Department of Ternopil Regional State Administration, State Treasury Service of Ukraine in Ternopil region, Department of Finance of Chernivtsi Regional State Administration, Ternopil National Economic University. The scope of use is the activities of the Ministry of Regional Development, Construction and Housing and Communal Services of Ukraine, the Committee of the Verkhovna Rada of Ukraine on Economic Policy