New tax-free threshold regulations

Poland’s parliament introduced amendments to the bill on tax-free threshold. According to the proposals put forward by the Senate, people with low income will be exempted from paying income tax.

The current tax-free threshold in Poland is 3,091 PLN. This week, the parliament worked on the bill keeping the amount on the same level for 2016 and 2017. The bill was passed through the Sejm, the lower chamber of Polish parliament, and went to the Senate. The body could have left the bill intact or suggested some of their own amendments. They decided on the second option.

The higher the tax-free threshold, the lower taxation for citizens. In Poland, the level is noticeably lower than in the neighbouring countries, not to mention the western part of the European continent. This means that even those with low or average earnings are obliged to pay personal income tax.

According to the changes, Poles with annual income up to 6600 will be completely exempted from paying income tax. In other words, the tax-free amount will be set at 6600 PLN. Considering the minimum monthly salary from January 2017 will be 2000 PLN, the ones benefiting the most are people employed part-time, working odd jobs, without stable income. The Ministry of Finance estimates the new tax-free threshold will apply to around 3 million people.

The changes will also affect those with high income. For the citizens earning more than 85,528 PLN per year, the tax-free threshold will be lowered. Those with annual income exceeding 127,000 PLN will have to pay tax without any threshold taken into consideration. For them, the tax-free amount will be zero.

For a vast number of Poles, the amendments will bring no effect. Most people have earning ranging between 11,000 and 85,528 PLN. For them, the tax-free threshold will stay on the current level, i.e. 3091 PLN. For those earning between 6,600 and 11,000 PLN, the amount will be increased.

The issue of the tax-free threshold was a point of discussion during the last general election campaign. Prawo i Sprawiedliwość party promised its voters it will increase the threshold. Now, they say they have fulfilled the promise. Critics argue a new tax-free threshold should apply to all citizens alike.

The Senators’ amendments were taken back to the Sejm, which accepted them. The bill then went to the President’s office and was signed by the head of the state, which means it will soon become law.