Personal Income Tax (PIT) – Poland

12% tax rate on income up to PLN 120,000 (approximately €28,000 or $30,000). This is annual income, so PLN 10,000/month threshold. Covers most average earners in Poland. Much lower than neighboring countries.

Income exceeding PLN 120,000 taxed at 32%. For example, earning PLN 180,000 means: PLN 120,000 at 12% + PLN 60,000 at 32%. Top rate lower than Germany (45%) or France (45%). Kicks in at relatively high income for Polish standards.

Everyone gets PLN 30,000 (€7,000) tax-free annually. This is kwota wolna od podatku. First PLN 30,000 of income completely exempt from tax. Effectively raises threshold for 12% bracket. Significant benefit for lower earners - first PLN 2,500/month tax-free.

Everyone pays 9% health contribution (składka zdrowotna) on income. This funds public healthcare system. NOT a tax technically but functions like one. Paid monthly based on income. Can partially deduct from tax: 7.75% deductible, effective cost 1.25%.

Unlike social security, health contribution has no upper limit. Earn PLN 10,000/month = PLN 900 health contribution. Earn PLN 100,000/month = PLN 9,000 health contribution. Controversial element of Polish Deal - hits higher earners hard.

For flat tax self-employed, health contribution calculated on revenue not profit. Major complaint: can have low profit but high revenue = large health contribution. Example: PLN 100,000 revenue, PLN 20,000 costs, PLN 80,000 profit but pay 9% of PLN 100,000 = PLN 9,000. Being reviewed.

Special deduction (ulga dla klasy średniej) for middle income earners. Reduces tax burden for those earning PLN 68,412 to PLN 133,692 annually. Roughly PLN 5,700-11,100/month. Helps offset increased health contribution from Polish Deal reforms.

Relief amount decreases as income rises. Maximum around PLN 5,000/year for income near PLN 68,000, gradually reducing to zero at PLN 133,692. Applied automatically by employer or when filing return. Somewhat complex calculation but beneficial.