Net income and exceeding tax thresholds in 2025

Exceeding the tax threshold is a key moment in the annual income tax return. For many taxpayers, it is crucial to determine what level of net income triggers entry into the second tax bracket and what the financial consequences of this are. The following article is based on the current regulations in force in 2025 and takes into account both the specifics of the tax scale, as well as the nuances concerning tax-deductible expenses, social security and health insurance contributions, and the possibilities for reducing tax liability through tax reliefs and preferential tax treatment.

The tax bracket system in Poland: fundamentals and principles

The Polish tax scale provides for two basic tax thresholds for individuals filing their tax returns under the general rules (PIT-36, PIT-37), as well as an additional solidarity levy on income exceeding 1,000,000 PLN per year. The first threshold covers income up to PLN 120,000 per year; the second applies to income exceeding this amount. The tax-free allowance applicable in 2025 is PLN 30,000, and the tax-reducing allowance is PLN 3,600. This means that a taxpayer whose annual income does not exceed 30,000 PLN will not pay income tax, whilst income above this threshold is subject to progressive taxation.

Tax rates and their application

• 12% – for a tax base of up to 120,000 zł, less the tax-reducing amount (3,600 zł)
• 32% – on the amount exceeding PLN 120,000
• 4% solidarity levy – on the amount exceeding 1,000,000 zł

It is worth noting that the higher tax rate applies only to the portion of income exceeding the set threshold, and not to the total income earned.

How do you calculate net income and determine when the tax threshold is exceeded?

The key issue is determining the level of net income at which a taxpayer moves into a higher tax bracket. To do this, the calculation process should be broken down into stages, taking into account all mandatory deductions.

1. Gross income and the tax base

Gross income is the sum of wages and other income received in a given tax year before the deduction of social security and health insurance contributions. The tax base is gross income less:

• social security contributions (pension, disability and sickness) – in 2025, these amount to a total of approximately 13.71 per cent of gross income,
• tax-deductible expenses – typically PLN 250 per month for an employee working in their place of residence,
• other deductions provided for by law (e.g. social insurance contributions arising from civil law contracts or business activities).

2. Health insurance contribution

After deducting social security contributions and tax-deductible expenses from gross income, we arrive at the basis for calculating the health insurance contribution. The rate is 9 per cent and, from 2022, is no longer tax-deductible, which significantly affects the amount of net income.

3. Tax calculation

The calculated income is taxed according to the following scale:

• up to 120,000 PLN – 12 per cent,
• over PLN 120,000 – 32% on the excess.

In the first tax bracket, a tax-reducing allowance of 3,600 zł per year applies.

4. Net income

Net income is the amount that the taxpayer actually receives ‘in hand’ after deducting all contributions and taxes due from their gross income.

Tax thresholds and net income – practical calculations

Based on current rates and parameters, in order not to exceed the second tax threshold, annual net income may amount to a maximum of approximately 87,400 zł. This means that the average monthly net pay should not exceed 7,280 zł.

Once the threshold of PLN 120,000 gross (i.e. approx. PLN 10,000 gross per month) is exceeded, every additional zloty of income above this limit is taxed at a rate of 32 per cent. Consequently, net income grows more slowly – for example, for annual gross earnings of 150,000 PLN, the net income is only around 105,000 PLN.

Calculations using an example

An employee earns 150,000 zł gross in 2025. Social security contributions (13.71%) amount to 20,565 zł. Tax-deductible expenses amount to PLN 3,000 (PLN 250 × 12 months). Basis for calculating the health insurance contribution: 150,000 PLN – 20,565 PLN = 129,435 PLN. Health insurance contribution: 129,435 PLN x 9% = 11,649 PLN. PIT taxable income: PLN 150,000 – PLN 20,565 – PLN 3,000 = PLN 126,435. Tax: 10,800 PLN (12% of 120,000 PLN) + 2,059 PLN (32% of 6,435 PLN) – 3,600 PLN (tax-reducing amount) = 9,259 PLN. Net income: 150,000 PLN – 20,565 PLN – 11,649 PLN – 9,259 PLN = 108,527 PLN.

The above calculation shows that exceeding the tax threshold results in a significant slowdown in the growth rate of take-home pay.

What factors influence when the threshold is actually exceeded?

There is no universal net amount which, once exceeded, always triggers entry into the second tax bracket – as this is influenced by individual factors:

• the type of contract – an employment contract has different parameters to B2B contracts or civil law contracts,
• social security contributions and tax-deductible expenses – self-employed individuals have greater scope to shape their tax base,
• tax reliefs – child tax relief, rehabilitation relief, internet tax relief or joint tax returns with a spouse can effectively delay the point at which you enter the higher tax bracket,
• special exemptions – e.g. relief for young people up to the age of 26 or relief for families with four or more children.

In practice, each situation requires a separate analysis, and the figures given should be treated as indicative.

Exceeding the tax threshold: advance payments and the annual tax return

Employers, who are responsible for paying tax advances, monitor the total amount of wages paid on an ongoing basis. When an employee’s total gross income exceeds PLN 120,000, advance tax payments for subsequent months are deducted at a rate of 32 per cent of the excess amount. In HR and payroll systems, exceeding the threshold is automatically recorded, and the relevant information appears on PIT-11 forms.

It is worth noting the specific circumstances of those exempt from PIT – including young people under the age of 26. Once the tax-free threshold (85,528 zł) is exceeded, any further income is subject to tax, and once the 120,000 zł threshold is exceeded, the excess is taxed at a rate of 32%.

Solidarity levy: the third threshold for high incomes

Taxpayers with an annual income exceeding PLN 1,000,000 are required to pay an additional solidarity levy of 4 per cent on the amount exceeding that million. This levy applies to both those on the tax scale and those paying a flat-rate tax, as it covers total income from various sources, including the stock market and business activities.

• For an income of PLN 1,200,000, the solidarity tax will amount to approximately PLN 8,000 (4% of PLN 200,000)
• For an income of 1,500,000 zł – approx. 20,000 zł (4% of 500,000 zł)

How can you legally avoid entering the second tax bracket?

There are several legal strategies that allow you to reduce the risk of exceeding the tax threshold or minimise your effective tax burden:

1. Joint tax return for married couples – this allows income to be split and the tax-free allowance and thresholds to be utilised twice. The PLN 120,000 threshold then applies to half of the joint income, and the effective threshold for entering the second tax bracket for married couples is PLN 240,000 in total.
2. Switching to a flat-rate tax – business owners may opt for a 19 per cent flat-rate tax, which does not take tax brackets into account, and the rate remains fixed regardless of income level. It is worth bearing in mind, however, that the flat-rate tax does not allow for most tax reliefs or the tax-free allowance.
3. Optimising costs and deductions – in the case of a business, you can increase your tax-deductible costs by investing sensibly in the company’s development.
4. Making use of tax reliefs – family relief, internet relief, rehabilitation relief and others can significantly reduce your effective tax base.

Practical recommendations

In 2025, the second tax bracket is reached once gross income exceeds PLN 120,000. In terms of net income, this threshold is reached with annual earnings of approximately PLN 87,400 net (around PLN 7,280 per month). However, it is worth bearing in mind that each situation requires an individual analysis, taking into account the form of employment, deductions, tax reliefs and joint tax returns.

Those planning to exceed the tax threshold should consider tax optimisation: filing a joint tax return with a spouse, opting for a flat-rate tax in business activities, or making use of available tax reliefs. High earnings are associated not only with a higher PIT rate, but also with the obligation to pay the solidarity levy once income exceeds 1,000,000 PLN. It is essential to systematically monitor your cumulative income throughout the year in order to manage your tax liabilities effectively.

If in doubt, it is worth consulting a tax adviser or using dedicated salary calculators which take into account current social security contributions and tax thresholds.