Tax-free allowance in 2025

The tax-free allowance is one of the fundamental elements of the tax system, designed to ease the tax burden on those on lower incomes. In 2025, this allowance remains at 30,000 zł, meaning that income up to this amount is exempt from personal income tax (PIT). Despite political announcements regarding an increase in the tax-free allowance to 60,000 zł, no changes in this regard are anticipated for 2025, primarily due to budgetary constraints and the country’s current macroeconomic situation.

Definition and mechanism of the tax-free allowance

The tax-free allowance is the amount of income on which a taxpayer is not required to pay income tax. In practice, this means that individuals filing their tax returns using the tax scale (PIT-36 and PIT-37 forms) do not pay income tax if their annual income does not exceed 30,000 PLN. The level of the tax-free allowance has remained fixed since 2022 and is linked to the tax-reducing amount, which in 2025 stands at PLN 3,600 per year (PLN 30,000 × 12%).

The tax-reducing amount is applied when calculating monthly tax advances, which results in an automatic reduction in the tax liability during the tax year, provided that a PIT-2 declaration has been submitted to the tax collector.

Who is eligible for the tax-free allowance?

This relief is available only to taxpayers who settle their tax liability according to the tax scale, which excludes those paying a flat-rate tax (19%) or a lump-sum tax on recorded income. This is of particular importance for employees working under an employment contract, a contract of mandate or a contract for specific work, as well as for business owners who have opted for taxation under general rules.

For those with multiple sources of income, the tax-reducing amount may be divided amongst up to three payers, allowing for flexible use of this mechanism.

Tax thresholds and their relationship to the tax-free allowance in 2025

Personal income tax in Poland is based on a progressive scale with two main tax thresholds:

• First threshold: income up to 120,000 zł is taxed at a rate of 12%, taking into account a tax-reducing amount of 3,600 zł per year;
• Second bracket: income above 120,000 PLN is taxed at a rate of 32% on the amount exceeding this threshold.

In addition, there is the so-called ‘solidarity levy’, i.e. the third tax threshold, calculated at 4 per cent on income exceeding PLN 1,000,000 per year.

Practical examples of tax calculations for 2025

A taxpayer with an annual income of 50,000 PLN will pay tax according to the following formula:

• 12% × PLN 50,000 = PLN 6,000,
• less the tax relief of 3,600 zł,
• meaning the tax payable will be PLN 2,400.

In the case of an income of PLN 140,000, the tax consists of:

• PLN 10,800 (12% × PLN 120,000 minus PLN 3,600),
• plus 32% × (140,000 PLN – 120,000 PLN) = 6,400 PLN,
• which gives a total of 17,200 zł.

Joint tax return and double tax-free allowance

Taxpayers filing PIT-36 or PIT-37 returns may choose to file a joint return with their spouse or as a single parent. In such cases, they are entitled to a double tax-free allowance, i.e. 60,000 zł. This means that the couple’s combined income up to this amount is not subject to tax, which constitutes a significant tax relief and a tool for tax optimisation.

Joint filing is particularly worth considering when one spouse has a significantly lower income or no income at all, whilst the other exceeds the first tax threshold.

Tax allowances and their impact on the amount of tax after taking the tax-free allowance into account

The tax-free allowance does not restrict taxpayers’ right to claim other reliefs and deductions, which may further reduce the amount of tax due. The most commonly used reliefs include:

• child tax relief,
• rehabilitation allowance,
• the internet allowance (up to 760 zł per year),
• deductions for social security and health insurance contributions,
• energy efficiency and research and development relief,
• donations to charity and for religious purposes.

Making use of these tax reliefs allows for a more effective reduction in tax liabilities, which is particularly important as one approaches the second tax threshold.

Prospects for change and budgetary challenges in the context of the tax-free allowance

Despite numerous political declarations regarding an increase in the tax-free allowance to 60,000 PLN, the state’s financial realities and EU procedures relating to excessive budget deficits mean that no such increase is forecast for 2025. The costs of such a reform are estimated at around 56 billion zlotys per year, which poses a significant challenge to the stability of public finances.

However, mechanisms for gradually introducing changes or modifying the scope of beneficiaries of the increased tax-free allowance are being considered, for example by limiting the relief for those on the highest incomes. At present, however, there are no specific legislative decisions in this regard.

Practical advice for taxpayers

• By submitting a PIT-2 declaration to your employer, you can benefit from the relief reducing your monthly tax instalments during the year;
• If you have several sources of income, you should allocate the tax-reducing amount appropriately amongst the payers to avoid overpayments;
• If you run a business accounted for under the general rules, the tax-free allowance is only taken into account in your annual tax return;
• Joint tax returns for married couples can significantly reduce tax liabilities by doubling the tax-free allowance;
• It is worth taking advantage of available tax reliefs, which can further reduce the tax due;
• Taxpayers should keep abreast of legislative changes and seek professional tax advice to optimise their tax returns.

Comparison of the tax-free allowance in Poland with other countries

In a European context, the tax-free allowance in Poland (30,000 PLN) falls within the average range. By way of comparison:

• Germany: approximately 50,000 PLN (9,744 euros),
• France: no fixed tax-free allowance; the system is based on a complex progressive scale taking into account the number of people in the household,
• Spain: approximately 24,000 PLN (5,550 euros),
• Italy: approximately 34,000 PLN (8,000 euros),
• USA: the standard deduction is approximately 58,400 PLN (14,600 USD),
• Australia: approximately 47,000 PLN (18,200 AUD).

It follows that, despite the increase in the tax-free allowance in Poland, we remain below the level of the wealthiest Western countries, although we are ahead of many countries in Central and Eastern Europe.

Summary

The tax-free allowance in 2025 remains at 30,000 PLN, which provides significant support for taxpayers on lower and middle incomes. The system of progressive tax brackets, linked to the tax-free allowance, enables a fair distribution of the tax burden. Despite numerous political announcements, the tax-free allowance will not be raised to 60,000 PLN in 2025 due to budgetary constraints and the risk of worsening the deficit. In a rapidly changing legislative and macroeconomic environment, it is crucial to manage tax returns in an informed and professional manner, to make use of tax reliefs, and to keep abreast of changes in tax law.

Frequently asked questions

What is the tax-free allowance in 2025?

In 2025, the tax-free allowance is 30,000 PLN per year. This means that income up to this amount is not taxed, and the taxpayer does not have to pay personal income tax, provided they file their return using the tax scale (PIT-36, PIT-37).

Will the tax-free allowance rise to 60,000 zł in 2025?

An increase in the tax-free allowance to 60,000 PLN had been announced, but this change will not be introduced in 2025. The government plans to implement this increase during the current parliamentary term, but no specific implementation date has been given.

Who is eligible for the tax-free allowance?

The tax-free allowance is available to taxpayers who file their tax returns using the tax scale under the general rules – mainly those submitting PIT-36 and PIT-37 forms. It does not apply to taxpayers who are taxed at a flat rate, under the flat-rate scheme, or whose income derives from capital gains or the sale of property.

How does the tax-free allowance affect the calculation of income tax?

The tax-free allowance reduces the tax base, which means that income tax is calculated only on income exceeding 30,000 zł. In practice, this means that those earning up to this amount do not pay tax, whilst those with higher incomes pay tax on the amount exceeding the tax-free allowance.

What are the tax bands applicable in 2025?

In 2025, there are two tax bands: 12 per cent for income up to 120,000 zł and 32 per cent for income above that amount. Income up to 30,000 zł is tax-free thanks to the tax-free allowance, so the 12% tax is calculated on the amount exceeding this figure.

What is the tax-reducing allowance and how does it work in 2025?

The tax-reducing allowance is the amount by which the income tax due can be reduced. In 2025, it amounts to PLN 3,600 per year (i.e. PLN 300 per month) and is directly linked to the tax-free allowance. Employees who submit a PIT-2 form to their employer benefit from it automatically, which reduces their monthly tax advances.

Do I have to submit a PIT return if my income does not exceed the tax-free allowance?

Yes, even if your income falls within the tax-free allowance and your tax liability is zero, you are still required to submit an annual PIT return. An exception applies to people aged 26 or under who benefit from the youth tax relief; with an income of up to 85,528 zł, they may be exempt from the obligation to file a tax return.