New tax changes

Starting from the 1st of July 2022, the Ministry of Finance proposes the following amendments: 

1. Reducing the tax rate within the first tax threshold from 17% to 12% for taxpayers on the tax scale, such as retirees, pensioners, employees, contractors, and some entrepreneurs. The 120 000 PLN tax threshold and the 30 000 PLN tax-free allowance will remain unchanged; 

2. Repealing the middle-class tax relief, but under the condition that the taxpayer may choose whether to take advantage of the tax relief when filing an annual tax return. The vice minister stated that the e-PIT system will indicate the more favorable solution for tax settlement when submitting the annual tax return. If settling tax via the new mechanism is less favorable, the taxpayer has the option of settling taxes according to regulations in effect since the 1st of January 2022, which include the middle-class tax relief; 

3. Introducing a unified system for calculating advance payments or repealing the obligation of double advance payment calculations of taxes for the year 2022. This includes repealing the mechanism extending the collection and payment of advances for income tax during the year 2022; 

1. Reducing the tax base by health insurance contributions for taxpayers settling taxes in a flat tax system, a lump sum, or a tax card: 

1. Flat tax - annual limit: 8 700 PLN - reduction of income; 

2. Lump-sum tax - annual limit: 50% of contributions paid for health insurance - reduction of income; 

3. Tax card - annual limit: 19% of contributions paid for health insurance - reduction of income; 

5. Changing the rules for applying a tax-reduction amount (PIT-2) on advance PIT payments for people on multiple tenures, or people having multiple income sources. With the new tax rate of 12%, the amount of tax relief will be set at 3 600 PLN per year (30 000 PLN x 12% = 3 600 PLN) which amounts to 300 PLN per month. Having several contracts, the taxpayer will have the option to divide the tax-free amount and authorize a maximum of 3 taxpayers (employers, commissioners, Social Insurance Institution) to utilize the PIT monthly advance tax reduction amount. In the case of one contract, that amount will be 300 PLN, with two contracts 2 x 150 PLN, and with three contracts 3 x 100 PLN; 

6. Re-introducing the possibility of joint taxation with a child in the annual PIT tax settlement for single parents. Joint taxation will replace the 1500 PLN single parent relief; 

7. Increasing the amount of income children can attain each year, without affecting the tax preferences of their parents. The current annual limit of a child’s income is 3 089 PLN and will be increased to 16 061,28 PLN; 

8. Family pensions for minors will not be added to the income of parents. The child will also be able to take advantage of the tax-free allowance amount of 30 000 PLN as a separate taxpayer;’ 

9. Tax reliefs, such as relief for people under the age of 26, relief for people returning from abroad, relief for parents with at least 4 children, relief for working seniors; will also include maternity benefits provided to parents and caretakers who accept children for upbringing; 

10. Introducing a shielding mechanism for organizations of public benefit - connected with 1% of tax allocated by individuals for Public Benefit Organizations; 

11. Repealing the relief for antiques (from 2023), and the lump-sum from untaxed income (i.e., tax abolition) 

12. Extending the date for submitting JPK, CIT, and PIT - new deadline: year 2025.