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Lower health insurance contributions in 2025
Changes to the rules for calculating entrepreneurs' health insurance contributions, due to take effect on 1 January 2025, raise considerable controversy and questions among business owners. The Ministry of Health and the Ministry of Finance presented plans to abolish the obligation to pay health contributions on disposed fixed assets while removing the possibility of deducting part of the contributions in PIT. These proposed changes are meant to bring equality in taxing all entrepreneurs, but raise many questions about the new contribution amount depending on the chosen tax settlement method. At first glance, entrepreneurs and self-employed people with low incomes stand to gain most. The contribution may be as little as PLN 286 for taxpayers in the lowest bracket. The business tax method naturally matters: contribution amounts vary depending on the chosen way of settling business accounts.
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General rules (tax scale):
In 2025, entrepreneurs taxed under the general rules will pay a fixed health contribution. According to the announcement, it will be 9% of 75% of the national minimum wage. This is a significant change from the current situation, where the contribution depends on the entrepreneur's income.
Formula: 9% x (75% x minimum wage) = health contribution
Example: the current minimum wage in Poland is PLN 4,242. 9% x (75% x PLN 4,242) = PLN 286
Thus, a company's income under the general rules will not affect the fixed health contribution.
Flat tax:
For those whose monthly income does not exceed twice the average wage, the health contribution will be 9% of a base equal to 75% of the national minimum wage.
Formula: 9% x (75% x minimum wage) = health contribution
Example: the current minimum wage in Poland is PLN 4,242. 9% x (75% x PLN 4,242) = PLN 286
For those whose income exceeds twice the average wage, the contribution will be 4.9% of the excess income above that amount, plus the "base" amount mentioned above: 9% of 75% of the minimum wage.
Formula: 9% x (75% x minimum wage) + 4.9% x (income earned - 2(average wage))
Example: the average wage in Poland is PLN 7,824. An entrepreneur earned PLN 15,000. 286 + (4.9% x (PLN 20,000 - 2(PLN 7,824))) = PLN 286 + (4.9% x (PLN 20,000 - PLN 15,648)) = PLN 286 + (4.9% x PLN 4,352) = PLN 286 + PLN 213 = PLN 499
Entrepreneurs paying flat tax will also be able to pay monthly health contributions based on 1/12 of their last reported annual income, with a correction in the annual settlement.
Lump-sum taxation:
For lump-sum taxpayers, the situation will be similar. From 2025 the contribution will be 9% of 75% of the national minimum wage if their monthly revenue does not exceed four times the national average wage.
Formula: 9% x (75% x minimum wage) = health contribution
Example: the current minimum wage in Poland is PLN 4,242. 9% x (75% x PLN 4,242) = PLN 286
For entrepreneurs whose income exceeds four times the national average wage, the health contribution will be 3.5% of the excess over that value.
Formula: 9% x (75% x minimum wage) + 4.9% x (income earned - 4(average wage)).
Example: the average wage in Poland is PLN 7,824. An entrepreneur earned PLN 40,000. 286 + (3.5% x (PLN 40,000 - 4(PLN 7,824))) = PLN 286 + (3.5% x (PLN 40,000 - PLN 31,296)) = PLN 286 + (3.5% x PLN 8,704) = PLN 286 + PLN 304 = PLN 590.
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Summary
The changes devised by the ministries are certainly beneficial to smaller entrepreneurs and the self-employed. Those below the thresholds at which the calculation changes will have one unchanging amount determined by a relatively simple formula. It will be somewhat different for high-income entrepreneurs. Compared with the current method, they may pay higher contributions. As shown above, the method of settling income tax will also matter when determining the amount due. It is therefore worth analysing the advantages and disadvantages of each method with a tax adviser, particularly if the goal is to maximise business income while minimising costs.
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