Polish politicians are already trading tax promises ahead of the election campaign, but the bill for the most generous ideas may land on entrepreneurs. A fight over the 60,000 PLN tax-free allowance and the frozen 120,000 PLN PIT threshold is exposing a hidden cost in Warsaw’s reform plans.
At a Thursday press breakfast on the Warsaw Stock Exchange, Finance Minister Andrzej Domański said no final decision has been made on raising the tax-free amount to 60,000 PLN. He pointed to work on the 2027 budget and Poland’s membership in the EU’s excessive deficit procedure, which forces the government to find credible financing for any costly PIT change. The risk of a presidential veto adds another constraint.
The Polish People’s Party (PSL) has proposed a staged rise: 35,000 PLN from 2027, 45,000 PLN from 2028 and 60,000 PLN from 2029. Estimates cited in the Sejm put the annual cost of a one-off doubling at about 56 billion PLN, while the phased variant would cost around 11 billion PLN. The threshold-unfreezing push, backed by the opposition and Poland 2050, is aimed at the growing group of better-paid specialists.
The battle over frozen thresholds
A civic petition supported by PiS and Konfederacja wants the first tax threshold moved from 120,000 PLN to 171,000 PLN, an amount calculated as twice the median wage from June 2025. The author argues that thresholds should be indexed automatically; today the opposite happens. The 120,000 PLN threshold has not moved since it was introduced under the Polish Deal in 2022.
Finance Ministry data show why the issue is gaining traction: 2.411 million taxpayers reported income above 120,000 PLN, compared with 1.935 million a year earlier. That is 476,000 more people, an increase of almost 25%. Nearly one in ten PIT payers now falls into the 32% rate.
Katarzyna Pełczyńska-Nałęcz, minister of funds, has repeatedly called for unfreezing the threshold to 140,000 PLN. Her argument is that the state should not increase PIT revenue merely because nominal wages are rising. The Finance Ministry counters with the cost: multi-billion losses for the budget and local governments, rising defence spending and the EU deficit procedure. Despite the ministry’s recommendation to reject the petition, the Petitions Committee sent it to the Public Finance Committee. Rafał Bochenk, the committee chair, cited economists who say the threshold should now be close to 176,000 PLN, while PiS MP Robert Warvas noted that other PIT bills are already waiting in the same committee.
A separate presidential proposal from autumn 2025, put forward by Karol Nawrocki, would raise the first threshold to 140,000 PLN. Nawrocki argued that unchanged thresholds combined with wage growth push taxpayers into the higher bracket because of inflation, not because they became genuinely richer.
The business catch: tax preferences on the line
Tax-free allowance sounds neutral, but its impact depends on the tax system. Piotr Juszczyk, chief tax advisor at inFakt, calculates that increasing the allowance to 35,000 PLN gives every taxpayer on the general scale the same annual benefit of about 600 PLN, whether they earn the minimum wage or 200,000 PLN. Raising the threshold to 171,000 PLN works differently: the gain grows with income and only helps people who already cross 120,000 PLN.
Katarzyna Rupp, tax advisor and associate partner at PKF Polska, warns that no one can reclaim more tax than they actually paid. A minimum-wage worker would get a real gain of around 1,800 PLN a year, while the theoretical gain from doubling the allowance is 3,600 PLN.
Entrepreneurs are the biggest potential losers. Juszczyk notes that flat-rate and lump-sum taxpayers do not use the tax-free allowance and would not use it after the reform. If they simultaneously lose the right to deduct health or social contributions, they would give up a preference and receive nothing in return. At present, flat-rate entrepreneurs can count part of the health contribution as a cost; ryczałt payers reduce income by half of paid contributions; and tax-card entrepreneurs cut their tax by part of the contribution.
– Everyone on the scale gets the same symbolic benefit from the allowance. A higher threshold gives real savings, but only to better earners – said Juszczyk.
Dr Bartosz Kubista, managing partner and tax advisor at GLC Law Firm, sees a second layer in the PSL plan. If raising the allowance is paired with limiting social insurance deductions or scrapping tax-deductible costs, the state would tax money that goes straight to ZUS and never reaches the taxpayer. He also warns that removing deductible costs would increase the tax base and push workers into the second threshold faster.
– The question is not which proposal is better. The question is: whom do we want to help – said Kubista.
Kubista also dismisses the idea that 171,000 PLN is an election gift for the rich. After inflation from 2022 to 2026, today’s 120,000 PLN threshold is roughly worth 171,000 PLN, so the proposal is more like unfreezing a parameter that has quietly increased taxes for four years.
The practical break-even point is higher than many assume. Kubista says the common claim that the 32% rate starts at 13,000 PLN gross monthly is a simplification; after social contributions and deductible costs, the real starting point is around 11,900 PLN gross. A taxpayer with 13,000 PLN gross would save about 2,300 PLN a year if the threshold moved to 171,000 PLN, while full benefits would go to those earning about 20,000 PLN gross or more.
All proposals remain on paper. The Finance Ministry insists that before any reform can move forward, the money to fund it must be found.
Source: wnp.pl, Fot. Albert Zawada / PAP
