The tax-free allowance is a concept under the Personal Income Tax Act. In 2025, the tax-free allowance is PLN 30,000. It was significantly increased on January 1, 2022, due to amendments in tax regulations—specifically, the Polish Deal—where previously, this amount was PLN 8,000. This means that taxpayers who, in a tax year, earn income not exceeding PLN 30,000 are exempt from paying personal income tax (PIT).
This tax-free amount serves as a personal allowance, reducing the taxable income of individuals. In the Polish tax system, this mechanism ensures that a portion of the taxpayer’s income is tax exempt, thereby lowering the overall tax burden.
As of 2025, the tax-free allowance remains at PLN 30,000. This amount applies to taxpayers settling their income under the tax scale. The tax scale in Poland is progressive, meaning the tax rate increases with the taxpayer’s income.
The tax rates for 2025 are as follows:
The tax-reducing amount is directly related to the tax-free allowance; it is calculated as the product of the tax-free amount and the lowest tax rate (12%), resulting in PLN 3,600.
These income thresholds delineate the brackets within which different tax rates apply, ensuring a progressive taxation system.
Taxpayers whose annual income does not exceed PLN 30,000 benefit fully from the tax-free allowance, meaning they do not pay any personal income tax. For incomes between PLN 30,001 and PLN 120,000, the tax is calculated at 12% on the amount exceeding PLN 30,000, after accounting for the tax-reducing amount. Incomes above PLN 120,000 are taxed at 32% on the excess over PLN 120,000, in addition to PLN 10,800.
Individuals who are Polish tax residents are subject to unlimited tax liability, requiring them to report and pay taxes on their worldwide income, regardless of where it is earned.
There have been discussions about increasing the tax-free allowance to PLN 60,000. However, as of now, no legislative changes have been enacted to implement this increase. The allowance remains at PLN 30,000 for the foreseeable future.
It’s important to note that certain forms of income may be tax exempt under specific conditions, further affecting the taxpayer’s income subject to taxation.
Additionally, taxpayers opting for the flat rate tax system, known as ‘ryczałt,’ are subject to different tax rates and rules, which do not incorporate the standard tax-free allowance.
Understanding the nuances of the Polish tax system, including the implications of income thresholds and available exemptions, is crucial for accurate tax reporting and compliance.
