The employee tax-free amount (kwota wolna od podatku) is one of the most important factors affecting net salary in Poland. Employers often struggle to apply it correctly, even though the rules seem clear at first glance. When calculating the income tax advance (zaliczka) on an employee's salary, the employer has to take several complex elements into account, and the tax-free amount is one of the key factors determining the final pay.
The amount of the income tax advance depends not only on the income earned in a given month, but also on the employee's cumulative income since the beginning of the year from that payer (it determines whether the 12% or 32% rate applies). The advance is directly affected by, among other things, the tax-reducing amount (kwota zmniejszająca podatek), which is closely linked to the tax-free amount. The system is designed to tax all taxpayers fairly, regardless of the source of their income.
Each month the tax advance is reduced by 1/12 of the tax-reducing amount, provided the employee submits a statement to the employer on the PIT-2 form. Without this statement the employer cannot apply the tax-reducing amount when calculating the advance. This means the employee receives a lower net salary and can recover the overpaid tax only in the annual tax settlement
The PIT-2 form and its role in the tax-free amount
The PIT-2 form plays a key role in how the employer applies the tax-free amount. Version 9 of the PIT-2 form (used since 2023 and still current in 2026) contains all the taxpayer's requests and statements that directly affect how the income tax advance is calculated. The document was significantly expanded compared with earlier versions to cover all possible tax situations of employees.
The PIT-2 form is divided into several sections, each dealing with a different aspect of taxing employment income. Section C contains the taxpayer's statement to the payer on reducing the advance by the tax-reducing amount, which is the basic mechanism for applying the tax-free amount. Section D is designed specifically for taxpayers who have been granted a retirement or disability pension, reflecting their particular tax situation.
Section E of the PIT-2 form covers the taxpayer's statement of intent to use preferential taxation of income, which may apply to spouses or single parents. Section F contains statements on using increased employee tax-deductible costs. These elements can significantly affect the final amount of tax payable
Section G covers the taxpayer's statements on various tax reliefs, including the relief for people returning to Poland (ulga na powrót), the relief for families with 4+ children and the relief for working seniors. The return relief is limited to 4 years, and the taxpayer must state the specific years in which they want to use it. The remaining sections cover requests not to apply certain reliefs or costs, which may be beneficial in some tax situations.
An important rule is that the PIT-2 does not need to be submitted again in the next tax year if the facts stated in the previous year's statement have not changed. This means that a statement once submitted remains valid until circumstances change. If, however, the facts stated in the last statement have changed, the employee must withdraw or amend the statement (Article 31a(3) of the PIT Act).
- Prepare the current version of the PIT-2 form
- Complete the relevant sections according to your tax situation
- Submit the statement to your employer before the first salary payment
- Inform your employer of any changes during the year
- Check that advances are calculated correctly on subsequent payslips
Employee tax-free amount in 2026
In 2026 the tax-free amount is PLN 30,000 a year, which translates into a tax-reducing amount of PLN 3,600 a year. The rate under the tax scale (12% and 32%) is 12 percent, and the tax-reducing amount is 12 percent of the tax-free amount. Monthly, the tax-reducing amount is PLN 300, which means that every employee who has submitted a PIT-2 statement can expect the monthly tax advance to be reduced by that amount.
The system is designed to treat all taxpayers fairly. For income up to PLN 120,000, the tax is 12 percent minus the tax-reducing amount of PLN 3,600. The tax-reducing amount is also available to taxpayers in the second tax bracket, who pay 32 percent tax.
Since 2023 the statement on applying the reduction can be submitted to up to three payers (Article 31b(2) of the PIT Act). In it the taxpayer indicates 1/12, 1/24 or 1/36 of the tax-reducing amount, but the total reduction applied by all payers in a given month cannot exceed 1/12 of that amount, i.e. PLN 300 (Article 31b(3) and (5)). The taxpayer does this in the statement that authorises the payer to reduce the advance
The mechanism for splitting the tax-reducing amount between payers is particularly flexible. The taxpayer may choose to have the monthly amount applied by one payer at PLN 300, by two payers at PLN 150 each, or by three payers at PLN 100 each. This flexibility is particularly useful for people with several jobs or combining employment with other forms of work.
| Number of payers | Monthly amount for each | Basis | Total annual amount |
|---|---|---|---|
| 1 payer | PLN 300 | 1/12 of the tax-reducing amount | PLN 3,600 |
| 2 payers | PLN 150 | 1/24 of the tax-reducing amount | PLN 3,600 |
| 3 payers | PLN 100 | 1/36 of the tax-reducing amount | PLN 3,600 |
Employee who also runs a business
Employees who also run a business are in a special tax situation. Every taxpayer on the tax scale is entitled to only one tax-free amount, regardless of the number of income sources. In the annual tax return the tax-reducing amount (PLN 3,600) is deducted only once, from the combined income from employment and the business.
A business owner on the tax scale takes the tax-reducing amount into account in business tax advances by law - advances are payable only from the month in which income since the beginning of the year exceeds PLN 30,000 (Article 44(3) of the PIT Act), and if they also submit a PIT-2 to their employer, the amount will be applied twice during the year and the difference will have to be paid in the annual return. The decision whether to submit a PIT-2 to the employer is the taxpayer's and should be well thought through, taking into account the amount and timing of income from different sources.
A business owner may decide that the tax-free amount will be taken into account only when settling business income, not on the employment salary. In that case they do not submit a PIT-2 to the employer and withdraw any statement submitted earlier (Article 31a(3) of the PIT Act). The employer will then calculate the advance without the tax-reducing amount
Taxpayers who run a business need to plan their tax settlements particularly carefully. If business income is low, irregular or seasonal and will not exceed PLN 30,000 in the year, no business tax advances arise, and a PIT-2 submitted to the employer lets you use the tax-free amount on your regular salary. On the other hand, if business income is high and regular, the tax-free amount is already taken into account in the business advances, and a PIT-2 at the employer would mean an additional payment in the annual return.
Changing the decision on where the tax-free amount is applied during the tax year is possible but requires certain formalities. The taxpayer must inform all payers of the decision and submit or withdraw the relevant statements as needed. Such changes can complicate tax settlements and require careful planning.
Multiple jobs and the tax-free amount
The taxpayer can freely decide which payer applies the monthly tax-free amount, which is particularly important for people with several jobs. Instead of one payer, up to three payers can be indicated to apply the tax-reducing amount. This change is particularly beneficial for people with several low-paid jobs, who previously could indicate only one employer to apply the reduction.
The new rules make life much easier for people working in several places at once. Until the end of 2022, such a person had to choose one employer to apply the tax-free amount and paid the full advance with the other employers. This often meant significant tax overpayments that could be recovered only in the annual settlement.
People with several jobs can now split the tax-reducing amount between employers in the best way, matching the tax burden more closely to actual income. This is particularly useful for people working part-time for several employers. They can avoid a situation in which the tax burden is very low with one employer and very high with others
Applying the new rules in practice, however, requires careful planning. A person with several jobs needs to estimate their income from each employer and decide how best to split the tax-reducing amount. If one employer pays much more than the others, it may make sense to assign a larger part of the tax-reducing amount to that employer.
An employee working part-time under employment contracts for three different companies may decide to split the tax-reducing amount evenly between all employers. Each of them will apply a monthly reduction of PLN 100, which spreads the tax burden evenly and avoids significant tax overpayments during the year.
- People with several jobs can split the tax-reducing amount between up to three payers
- The split can be even or adjusted to the salaries paid by each employer
- Each employer must receive the relevant PIT-2 statement specifying the amount of the reduction
- The total of all reductions cannot exceed PLN 300 a month
- Changing the split during the year requires new statements to be submitted to the employers affected by the change
How advances are calculated with the tax-free amount
Calculating income tax advances with the tax-free amount is complex and involves many factors. The calculation is based on the income earned in a given month and the cumulative income since the beginning of the tax year. The employer must take into account not only the current salary but also all additional taxable benefits.
The first step in calculating the advance is to determine the tax base, i.e. the month's revenue reduced by tax-deductible costs (PLN 250 or PLN 300 a month) and the social security contributions deducted (Article 32(4) of the PIT Act). Tax is then calculated on that amount at the relevant rate. Under the tax scale the first rate of 12 percent applies until income since the beginning of the year from that payer exceeds PLN 120,000, and the second rate of 32 percent applies to the surplus above that amount.
After calculating the tax at the relevant rate, the employer deducts the tax-reducing amount if the employee has submitted the relevant PIT-2 statement. The monthly tax-reducing amount is PLN 300, PLN 150 or PLN 100, depending on the fraction (1/12, 1/24 or 1/36) indicated in the statement. An employee's advance is calculated on the month's income, so - unlike for a business owner - advances paid in previous months are not deducted from it (Article 32(2) of the PIT Act)
The calculation becomes more complicated for employees who change employer during the year or have additional sources of income. The new employer does not take into account income and advances from the previous employer - the PLN 120,000 threshold is counted separately for each payer (Article 32(2) of the PIT Act), and income from all sources is combined only in the annual tax return, based on the PIT-11 information (annual income statement from the payer) from each payer. The employee should, however, submit a PIT-2 statement to the new employer, because once employment ends the payer disregards statements submitted earlier (Article 31a(7)).
Pay particular attention to situations in which an employee crosses the first tax threshold. When income since the beginning of the year from a given payer exceeds PLN 120,000, the payer calculates the advance on the surplus at the 32 percent rate (Article 32(2) points 2 and 3 of the PIT Act). The tax-reducing amount is, however, available regardless of income, which means that even high earners can use it.
Impact of the tax-free amount on different forms of work
The tax-free amount affects different forms of work in different ways, because different types of contract are taxed under different rules. Under an employment contract the mechanism is the most regulated and predictable. The employer automatically takes the tax-reducing amount into account when calculating monthly advances, provided the employee has submitted the relevant statement. The thresholds that determine the size of the advances are explained in the tax scale – thresholds and settlement rules.
A contract of mandate (umowa zlecenia) is also taxed under the general rules, which means the contractor can use the tax-free amount. The principal, as payer, reduces the advance by the tax-reducing amount if the contractor submits a PIT-2 statement (Article 31b(1) and Article 41(1) of the PIT Act). It is important, however, that a contractor working for several entities remembers to split the amount between payers correctly.
Under a contract for specific work (umowa o dzieło), the client collects the advance under the same rules as for a contract of mandate (Article 41(1) of the PIT Act), so it too reduces the advance by the tax-reducing amount if the contractor submits a PIT-2 statement (Article 31b(1)). The exception is contracts of mandate and contracts for specific work worth up to PLN 200 concluded with a person who is not the payer's employee - for these the payer collects a 12% lump-sum tax without the tax-reducing amount (Article 30(1) point 5a). Without a PIT-2 statement, the tax-free amount will be taken into account only in the annual tax settlement
A business taxed under the general rules also allows the tax-free amount to be used. A business owner takes the tax-reducing amount into account when calculating business income tax advances (Article 44(3) of the PIT Act). If, however, the business owner is also employed under an employment contract, they must decide whether to submit a PIT-2 statement to the employer as well.
People running a business on the flat-rate tax on recorded revenue (ryczałt) cannot use the tax-free amount. Ryczałt is a separate form of taxation that does not provide for the tax-reducing amount. The same applies to the tax card (karta podatkowa), which is also a separate taxation system. Revenue records and returns for ryczałt taxpayers are part of our bookkeeping services.
Practical aspects of applying the tax-free amount
Applying the tax-free amount in practice requires proper planning and organisation by both employees and employers. Employees need to make informed decisions about where to apply the tax-free amount, taking their overall tax situation into account. Employers, in turn, need proper procedures for calculating advances and handling employees' statements.
One of the most important practical points is submitting PIT-2 statements on time. The statement should be submitted before the first salary payment in the tax year so that the employer can apply the tax-reducing amount straight away. The payer applies the statement no later than from the month following the month in which it was received (Article 31a(5) of the PIT Act), so if it is submitted later, advances for earlier months may be collected without the tax-free amount, which may result in a tax overpayment.
Changes in an employee's tax situation must be reported to the employer without delay. This applies in particular when the employee starts a business or takes up additional employment. Applying the tax-free amount incorrectly can lead to errors in tax settlements and the need for corrections in the annual settlement
Employers need proper IT systems to calculate advances correctly with the tax-free amount. These systems must handle employees' different tax situations, including splitting the amount between several payers. It is also important to keep proper records so that the correctness of the advances can be checked.
The correctness of advance calculations should be checked regularly by both employers and employees. Employees should check their payslips and verify that the tax-reducing amount is applied correctly. Any errors should be corrected without delay to avoid problems in the annual tax settlement.
A company employing 200 people introduced an electronic system for submitting PIT-2 statements that automatically passes the information to the HR and payroll system. As a result, the employer can immediately reflect changes in employees' tax situations and calculate advances correctly. The system also generates reports for checking that the tax-free amount is applied correctly for all employees.
