New tax brackets

Among other things, the bill reduces PIT rate in the first tax bracket from 17% to 12%. The tax threshold and the tax-free amount will remain the same, that is, 120 thousand zloty and 30 thousand zloty, respectively.

The 12% PIT rate will apply to taxpayers who use the tax brackets regardless of the source of income, the amount of tax-deductible costs, employment with more than one employer, or simultaneous retirement pension. The new rate will be available also to enterprises which tax their business according to tax brackets.

The explanatory notes to the bill indicate that after the changes, the tax on income of 120 thousand zloty (i.e. the top of the tax threshold) will amount to 10,800 zloty – in contrast to the current 15,300 zloty. Taxpayers who earn at least that amount will save in the new tax regime at least 4,800 zloty annually. With the rate of 12% taxpayers will feel the difference already at the time of paying tax advances. 

Although the lawmakers plan to leave the tax-free amount unchanged, the reduction of tax rate from 17% to 12% will change the personal exemption amount.

The personal exemption amount is a product of the tax-free amount and the tax rate. Therefore, the new personal exemption amount will amount to 3,600 zloty. It is now 5,100 zloty annually. As a consequence, the monthly reduction of income tax advance will also be lower and will amount to just 300 zloty (1/12 of the personal exemption amount). Currently it is 425 zloty.

The changes are planned to come into force in July 2022.

If you have any questions about the tax brackets and PIT burden, please contact Rödl & Partner experts.