Young workers in Poland benefit from favorable regulations that allow them to retain more of their income. They are eligible for what is known as the "youth tax relief," also referred to as the zero PIT for young people. This provides a tax exemption for individuals under 26 years of age. What are the rules, and who can take advantage of this in practice?
What is the PIT Exemption for Those Under 26?
The tax exemption for individuals under 26 is a measure designed to encourage recent high school graduates and students to enter the workforce in companies located within Poland. In practice, this means that a young worker just starting their career has the opportunity to earn more because their income is not taxed, making the difference between gross and net wages less significant.
The PIT exemption for those under 26 was introduced as part of the "Zero PIT for Youth" program, which aims to motivate young people to start working and pursue employment in Poland. Thanks to this relief, young employees do not have to pay personal income tax. Additionally, there is no need to fill out any special documents or forms—the relief is applied automatically. However, to benefit from this tax exemption until the age of 26, several conditions must be met, and age is just one of them!
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Who Is Eligible for the Under-26 Tax Exemption?
To qualify for the tax exemption for individuals under 26, you must meet both the age requirement and a condition related to the source of income. Only individuals receiving income from the following sources are eligible for this relief:
- Employment (based on an employment contract, civil service, cooperative work, or home-based work).
- Service contracts (umowa-zlecenie) with an individual running their own business, a legal entity, or organizational units that do not have legal personality.
- Graduate internships or student apprenticeships (income from these was included in the exemption starting in 2021).
Tax Exemption for Those Under 26 and Income Limits
It's important to note that tax-exempt income for individuals under 26 cannot exceed a set earnings limit, clearly defined by law. According to regulations, young workers can benefit from this relief if their annual income does not exceed PLN 85,528 gross, which translates to monthly earnings of no more than PLN 7,127 gross. However, the annual limit is the primary consideration. So, if someone was employed for less than a year but earned more than the monthly limit, they can still use the under-26 tax exemption as long as their total income does not exceed PLN 85,528. This limit applies to income from all eligible sources.
In early 2022, significant tax changes were introduced, including raising the tax-free threshold from PLN 85,528 to PLN 120,000. However, for the under-26 tax exemption, no changes were made, and the PIT threshold for young people remains PLN 85,528. Employees earning above this amount must pay tax according to the current tax scale.
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Tax Filing Requirements for Individuals Under 26
Individuals under 26 whose income does not exceed PLN 85,528 are not required to file an annual PIT return. They are also not required to submit a PIT-2 declaration, which lowers their tax. If this amount is exceeded, the young taxpayer will need to pay tax only on the portion of their income that exceeds the limit, not on the entire amount.
When calculating the excess above PLN 85,528, the tax-free amount (PLN 30,000) and the 12% PIT rate, which applies in the first tax bracket, must be considered. In practice, this means that a young worker will begin paying tax once their income reaches PLN 115,528 (PLN 85,528 + PLN 30,000).
Individuals under 26 who exceed the established limit due to sources such as business income, royalties, social security benefits, management contracts, or rental agreements must also file the appropriate PIT. The list of income sources that may increase annual income is quite extensive.
FAQ – Frequently Asked Questions
Do people under 26 pay tax in Poland?
In Poland, people under the age of 26 are generally exempt from paying income tax on employment and civil law contracts, thanks to a tax relief called the "Zero PIT for Youth" (Ulga PIT dla Młodych). This exemption applies up to an annual income limit of 85,528 PLN (gross).
What is the youth tax relief in Poland?
The "Youth Tax Relief" (Ulga dla Młodych) in Poland is a tax exemption designed to benefit young people entering the workforce. Introduced to help young workers retain more of their earnings, this relief exempts individuals under 26 from paying personal income tax (PIT) on specific types of income.
Who is not eligible for the under-26 tax exemption?
The tax exemption for those under 26 does not apply to individuals working under a specific-task contract (umowa-zlecenie). Young entrepreneurs who have started their own businesses are also not eligible for this relief.
What is the zero tax in Poland?
The tax-free threshold is set at 30,000 PLN, meaning that taxpayers with annual earnings below this amount are exempt from paying income tax. For income exceeding 120,000 PLN, the tax is calculated as 10,800 PLN plus 32% of the amount over 120,000 PLN.
