The Act Amending the Act on Personal Income Tax has been signed by the President and became effective as of 1 July 2022. The Act modifies the amendments introduced by Polish Deal 1.0, reducing the tax complexity to a certain degree.
Reduction in the tax rate from 17 to 12 per centThe first key change is a reduction in the income tax rate for non-flat rate taxpayers from 17 to 12 per cent. As a result, employees may expect higher net salaries. It should be stressed that the 12 per cent rate will apply to income up to the annual tax threshold of PLN 120,000. The first tax threshold remains unchanged. With any higher income, PIT payers will enter the 32 per cent tax bracket. The reduced PIT rate will be applied to salaries for July 2022. In addition, taxpayers will be entitled to settle their taxes for 2022 at a reduced rate, meaning that some people may expect tax refunds in 2023.
Tax relief for the middle class to be abolishedThe recently introduced tax relief for the middle class will be abolished and taxpayers will not be able to use it from 1 July 2022. However, it will be possible to use the relief for 2022 if it proves more advantageous for a given taxpayer than the rules introduced by Polish Deal 2.0. This means that the head of the relevant tax office will be required to calculate the hypothetical tax for 2022.Middle class relief will not apply to income earned from 1 January 2022. Tax remitters will not be required to make any adjustments to the already calculated relief and taxpayers will not be required to include the relief in their annual return for 2022.
The tax-free allowance to remain unchangedPolish Deal 1.0 introduced a new tax-free allowance of PLN 30,000. The second version of the Polish Deal does not change anything in this respect. Therefore, non-flat rate taxpayers will not pay this tax if their annual income after deductions does not exceed PLN 30,000. After crossing this threshold, taxpayers will pay tax on any amount exceeding PLN 30,000.
Change in the form of taxation during the yearPolish Deal 1.0 forced many taxpayers change the taxation regime from a non-flat rate to a rate of 19 per cent. Under Polish Deal 2.0, taxpayers will have the opportunity to reconsider their tax scheme and switch to a non-flat rate scheme.Taxpayers paying tax on registered income without deductibles will be able to change the tax scheme either:
a) effective as of July – from 22 August 2022, a taxpayer should submit a statement on leaving the flat-rate scheme and complete two returns at the end of the year, namely a PIT-28 form for flax-rate payers (for the period from January to June) and a PIT-36 form for taxpayers taxed according to the general rules (for the period from July to December); or
b) effective for the entire 2022 – a taxpayer may change the tax scheme between 1 January and 2 May 2023 by filing a PIT-36 form. Taxpayers will need to set up and complete a revenue and expense ledger for the entire 2022. No PIT-28 form should be filed for 2022, since it would mean continuing the flat rate scheme.
Partial exclusion of the healthcare contributionMost of the rules introduced by Polish Deal 1.0 will not be changed with respect to deducting healthcare contributions. Certain modifications will be introduced for 19 per cent flat-rate taxpayers, taxpayers paying tax on registered income without deductibles and lump-sum taxpayers.
a) taxpayers paying tax at 19 per cent may deduct healthcare contributions of up to PLN 8,700 as a deductible cost;
b) taxpayers paying tax on registered income without deductibles will be entitled to deduct 50 per cent of their healthcare contributions as their deductible cost; and
c) lump-sum taxpayers may deduct 19 per cent of the healthcare contributions paid.