Polish Deal - changes to Personal Income Tax regulations from 2022

On November 16, 2021, the president signed a package of amendments to tax laws as part of the so-called of the "Polish Deal". Below we present a brief summary of the most important changes in the field of PIT related to the establishment of new regulations.

Abolition of the right to deduct health insurance contributions from PIT

In the light of the introduced changes, starting from the new year, the PIT taxpayer's right to deduct the amount of the health insurance contribution from the personal income tax or the flat rate income tax on certain income earned by individuals will be abolished. At the same time, the amount of the health insurance contribution paid by entrepreneurs subject to the 19% flat tax will be determined in proportion to the income earned and will amount to 4.9% (until the end of 2021, the health insurance premium for entrepreneurs is set at a fixed amount, regardless of the income earned).

It is worth adding that the dates of settling health and social contributions and PIT advances have been standardized - until the 20th day of the month following the month for which advances and contributions were calculated.

Increasing the tax-free allowance and the second tax threshold

Pursuant to the amendment to the PIT Act, the tax-free allowance will be increased from PLN 3,091 to PLN 30,000. All taxpayers taxed according to the tax scale will be able to take advantage of the tax-free allowance.

Moreover, the tax threshold will be increased to PLN 120,000, beyond which the higher PIT rate of 32% will apply.

A relief for the middle class

In 2022, a tax relief is to enter into force, the purpose of which is to offset the effects of the lack of the right to deduct the health insurance contribution from the tax. This relief will be available to employees and entrepreneurs running a sole proprietorship who settle income tax according to general rules, i.e. based on the tax scale.

The right to the relief will be available to taxpayers who will earn revenues in the amount between PLN 68,412 and PLN 133,692 in the tax year.