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From 1 October 2019, most of us will pay lower personal income tax (PIT). Cutting the rate from 18% to 17% fulfils a PiS government promise. PIT in the first bracket, for everyone earning below PLN 85,528 gross annually, will be 17% instead of 18%.
Tax-deductible employment expenses will also rise, so PIT will be calculated on a lower amount. Higher earners will benefit too. Although the PIT rate remains 32% above PLN 7,127.30 monthly income, it applies only to annual income exceeding PLN 85,528, so total PIT due will be lower. How much less will we pay from 1 October 2019? See the detailed calculations of employees’ gains. The Sejm and Senate voted for the PIT cut, and the act has just been signed by President Andrzej Duda.
From 1 October 2019, we will all pay lower taxes. The basic PIT rate for income up to PLN 85,528 will be 17%, rather than 18%. Tax-deductible employment expenses are also to double, reducing the amount taxed and leaving more money in our pockets.
From 1 October 2019, we will all pay lower taxes. The basic PIT rate for income up to PLN 85,528 will be 17%, rather than 18%. Tax-deductible employment expenses are also to double, reducing the amount taxed and leaving more money in our pockets.
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Who benefits from the PIT reduction?
The tax-free allowance will also be higher for people earning below the minimum wage. Together these changes mean that from October, employees on employment contracts, mandate and specific-work contracts, as well as entrepreneurs who did not choose flat-rate or lump-sum taxation, will have more money. How much depends on their earnings.
Tax-deductible employment expenses depend on the employee’s situation. They are higher for people earning from several sources or commuting to work and are expected to more than double. The changes are:
one local full-time job: current allowance PLN 1,335 annually; from 1 October PLN 3,000 annually one full-time job with commuting: current PLN 1,668.72; from 1 October PLN 3,600 annually multiple local jobs: currently PLN 2,002.05; from 1 October PLN 4,500 annually multiple jobs with commuting: currently PLN 2,502.56; from 1 October PLN 5,400 annually
How will lower PIT affect employees’ earnings? Let us calculate.
Jan Kowalski works one job where he lives and earns the minimum PLN 2,100 gross (PLN 1,530 net). Until now he paid 18% tax on a PLN 1,701 tax base. From October, the tax base for his wages will be PLN 1,562 and the rate 17%. He will gain about PLN 40 monthly (about PLN 480 yearly).
Maria Kaczmarek earns PLN 7,000 gross in employment and currently receives PLN 4,944 in her account. With deductible costs of PLN 250 instead of PLN 111.25 and a 17% rate, her net pay rises by about PLN 82, or around PLN 984 a year.
People earning less than the minimum wage will gain substantially through amounts reducing tax. The lower the income, the higher the reduction. In practice, those earning up to PLN 8,000 gross annually (PLN 667 monthly) will pay no tax. 2019 tax cut – the amounts reducing PIT are: PLN 1,360 – for a tax base not exceeding PLN 8,000; PLN 1,360 minus an amount calculated by the formula: PLN 834.88 × (tax base – PLN 8,000) – PLN 5,000, for a tax base above PLN 8,000 but not exceeding PLN 13,000; PLN 525.12 – for a tax base above PLN 13,000 but not exceeding PLN 85,528; PLN 525.12 minus an amount calculated by the formula: PLN 525.12 × (tax base – PLN 85,528) – PLN 41,472, for a tax base above PLN 85,528 but not exceeding PLN 127,000.
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