Personal Income Tax cut in Poland as of October 1st 2019

On 30th of August 2019 the Polish parliament accepted the amendment of Tax Code (Ordynacja Podatkowa). The legal has been signed by the President on 19th of September, as the last step before its enforcement. The amendment shall enter into force on October 1st 2019. About 25 million taxpayers will benefit from the new provisions, according to the government’s estimations. The amendment introduces a number of changes lowering Personal Income Tax (PIT).

Firstly, the PIT rate on income under PLN 85,528 (ca. EUR 20,000) will be reduced from 18% to 17%. Income exceeding the abovementioned threshold will still be taxed at 32% due to progressive taxation. Despite all taxpayers will thus be entitled to receive the reduction (including for instance pensioners as pensions are taxed in Poland), it will cause an increase of the gap in overall tax rate gap between top and bottom earners.

Secondly, the amendment increases deductible costs by almost doubling them, effecting in decrease of the income tax. All taxpayers are eligible for the deduction – both employees and self-employed entrepreneurs (individuals and partners of partnership companies), as well as those who work on the basis of civil contracts, pensioners and taxpayers receiving proprietary rights income.

Moreover, a similar law was enacted as of 1st August 2019, granting a tax relief for most employees under the age of 26 (PIT rate at 0%). The changes are estimated to lower the government income by PLN 10bn (ca. EUR 2.35 bn) in 2020. 


For more information on the topic, kindly contact Kozlowski & Partners, our member firm in Poland

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