The tax-reducing amount (kwota zmniejszająca podatek) is one of the most important tax mechanisms, directly affecting the amount of monthly income tax advances. Since 2023 revolutionary changes have applied to the way it is used, significantly increasing flexibility for taxpayers, especially people with several jobs. Understanding these rules is key to settling taxes correctly and reducing the tax burden. For employees, what matters most is how the tax-free amount affects an employee's net salary.
What the tax-reducing amount is
The tax-reducing amount is a mechanism that makes it possible to reduce the monthly income tax advance. Its level follows directly from the tax-free amount (kwota wolna od podatku), which in Poland is PLN 30,000 a year. The tax-reducing amount is calculated using a simple mathematical formula. A separate case is income tax for pensioners running a business.
In monthly advances, the tax-reducing amount has been PLN 300 since 1 July 2022 (1/12 of the annual amount of PLN 3,600). It is calculated by multiplying the tax-free amount of PLN 30,000 by the 12 percent tax rate, which gives PLN 3600 a year, and then dividing by 12 months
The amount remains fixed and did not change in 2026. The tax-reducing amount is still PLN 300 a month, which makes it much easier for taxpayers to plan their tax burden.
The aim of this mechanism is to let taxpayers with lower incomes use their tax-free amount during the tax year, not only when filing the annual tax return. As a result, employees receive a higher net salary during the year, which improves their financial situation. We explain in a separate article when tax-free pensions are possible.
The tax-free amount of PLN 30,000 a year is available to every taxpayer settling under the tax scale (12% and 32%) (it is not available under the flat 19% tax (podatek liniowy) or ryczałt). This means that in practice no tax is paid on the first PLN 30,000 of annual income taxed under the tax scale — the amount is available once a year, jointly for all such income
Rules in force until the end of 2022
Until the end of 2022 the system for applying the tax-reducing amount had significant limitations that made it difficult for many groups of taxpayers to use. The main problem was that the PIT-2 statement (the taxpayer's statement for calculating monthly advances) could be filed with only one payer.
An employee who wanted to use the tax-reducing amount had to meet a number of strict conditions. Above all, they could not receive a retirement or disability pension through a payer unless they had filed a special EPD-18 application. In addition, taxpayers receiving benefits from the Labour Fund (Fundusz Pracy, FP) or the Guaranteed Employee Benefits Fund (Fundusz Gwarantowanych Świadczeń Pracowniczych, FGŚP) were excluded.
Before 2023, taxpayers running a business or earning income from rental or lease, on which they paid advances themselves under the tax scale, could not file a PIT-2 statement with their employer. This restriction also applied to people receiving benefits from FP or FGŚP
The most serious limitation was that a PIT-2 statement could be filed with only one payer. In practice this meant that people working for several employers on lower salaries could not make full use of the tax-reducing amount available to them. This often led to taxpayers paying higher advances during the year and only receiving a refund of overpaid tax in the annual settlement.
The system was particularly unfavourable for people working part-time for different employers, students combining study with work, and people providing services under civil-law contracts for various entities. The lack of flexibility in splitting the tax-reducing amount between payers was a significant barrier to reducing the tax burden.
Revolutionary changes from 2023
The year 2023 brought a fundamental transformation of the system for applying the tax-reducing amount. The changes were intended to increase flexibility and adapt the rules to today's labour market, where more and more people work for several employers at the same time.
New PIT-2 statement form
The form introduced from 2023 has the full name "Statements/Applications of the taxpayer for the purpose of calculating monthly personal income tax advances" (Oświadczenia/Wnioski podatnika dla celów obliczania miesięcznych zaliczek na podatek dochodowy od osób fizycznych). The document is much more extensive than the previous version and contains all the statements and applications that affect how the income tax advance is calculated.
The new PIT-2 form is only a suggested form. Taxpayers can submit statements in writing or in another form accepted by their employer (Article 31a(1)–(2) of the PIT (personal income tax) Act). Statements can be filed and withdrawn at any time of the year and at any point during employment
The key advantage of the new system is that statements can be managed flexibly. Taxpayers do not have to wait for the start of the tax year or the start of employment to file the relevant documents. They can do so at any time, adapting their statements to changes in their personal and professional situation.
Wider group of eligible taxpayers
One of the most important changes is a significant extension of the group of people who can file a PIT-2 statement. Since 2023 the tax-reducing amount can be applied to revenue from the following sources:
- Salaries for full-time work, including employment contracts, service relationships, outwork and cooperative employment relationships
- Contracts of mandate (umowa zlecenia) concluded under the Civil Code
- Contracts for specific work (umowa o dzieło) performed for various entities
- Management contracts with businesses
- Graduate internships organised by employers
- Management agreements concluded with various companies
Extending the catalogue of contracts covered by the option of applying the tax-reducing amount means that practically all forms of cooperation with employers can be covered by this mechanism. This applies to both employment relationships and civil-law contracts
This change is particularly important for people providing services under civil-law contracts, who were previously excluded from applying the tax-reducing amount. They can now reduce their tax burden during the year, not only in the annual settlement.
Splitting the amount between payers
The most revolutionary change is the option of splitting the tax-reducing amount between a maximum of three payers (Article 31b of the PIT Act). In the statement filed with each payer, the taxpayer can now indicate whether the payer is to reduce the monthly advance by:
- 1/12 of the tax-reducing amount – the full PLN 300 a month
- 1/24 of the tax-reducing amount – PLN 150 a month
- 1/36 of the tax-reducing amount – PLN 100 a month
Responsibility for not exceeding the monthly limit of PLN 300 lies with the taxpayer, not the employer. The taxpayer must make sure that the total tax-reducing amount applied by all payers does not exceed the permitted limit
This splitting mechanism makes it possible to adapt the tax-reducing amount very flexibly to each taxpayer's individual situation. People working for three employers can split the amount evenly, assigning PLN 100 a month to each payer. Taxpayers with one main job and additional contracts of mandate can assign a larger part of the amount to their main employer.
Applying the tax-reducing amount in practice
The new rules create various practical options for using the tax-reducing amount depending on the taxpayer's professional situation. Each case requires an individual approach and conscious tax planning.
A single contract with one employer
The simplest situation is employment with one employer under one contract. In this case the taxpayer can file a PIT-2 statement requesting the full tax-reducing amount of PLN 300 a month.
An important relief for taxpayers is that people who filed a PIT-2 statement earlier and whose situation has not changed do not have to file a new statement. Previous statements remain valid and the employer continues to apply the tax-reducing amount.
Employees hired before 2023 who filed a PIT-2 statement and whose professional situation has not changed are not required to file a new statement. The employer automatically applies the full tax-reducing amount of PLN 300 a month
Remember that a payer paying both a salary and benefits withholds one combined advance on the total amount. In that situation the employee files only one PIT-2 statement, covering all payments made by the same payer.
Several contracts with one employer
An increasingly common situation is one where a worker has several different contracts with the same entity. This may be a combination of an employment contract and a contract of mandate, a management contract with additional civil-law contracts, or other combinations of forms of cooperation.
In this situation one PIT-2 statement filed with that payer is enough. Under Article 31b(6) of the PIT Act, where in a given month a taxpayer receives revenue from different titles from the same payer, the payer applies the statement filed to that revenue, and the total reduction in that month may not exceed the amount indicated in the statement.
An employee working for one company under an employment contract, a management contract and a contract of mandate can file one PIT-2 statement with that company for 1/12 of the tax-reducing amount. The payer will then reduce the advances withheld from all three contracts by a total of no more than PLN 300 a month.
Observing the monthly limit of PLN 300 is key. The same payer counts as one of the (maximum three) payers, and the total reduction of advances with that payer may not exceed the amount indicated in the statement.
Several contracts with different payers
The new rules give the most flexibility to taxpayers working for different employers. They can decide themselves with which payers and in what proportion to file PIT-2 statements, observing only two basic limits: a maximum of three payers and a total of PLN 300 a month.
This freedom means that the taxpayer can adapt the split of the tax-reducing amount to their individual needs and financial situation. They can assign a larger part of the amount to the payer paying the higher salary, or split it evenly between all employers.
A taxpayer with five contracts of mandate can file a maximum of three PIT-2 statements, each for PLN 100 a month. They decide themselves with which payers to file statements and when to withdraw them and file them with other employers
An important advantage of the new system is that the whole tax-reducing amount can be used with one payer, even if the taxpayer works for several employers. This means that a person employed by two employers can decide to file a PIT-2 statement with only one of them, thereby using the full PLN 300 a month.
Special cases
The new rules also cover special situations that previously caused interpretation problems or made it impossible to use the tax-reducing amount.
Combining employment with a business
One of the most important changes concerns taxpayers running a business. Until the end of 2022, people paying advances on income from a business taxed under the tax scale were excluded from filing a PIT-2 statement with their employer. Since 2023 they can file such statements regardless of running a business.
Since 2023 taxpayers running a business can file PIT-2 statements with their employers. However, this does not mean two tax-free amounts: in the annual PIT-36 tax return, income from employment and from a business taxed under the tax scale is added together, and the tax-reducing amount of PLN 3,600 is available only once
This change matters in practice because it allows advances to be reduced during the year. If the tax-reducing amount is used twice in the advances (with the employer and in the business), the difference will be shown as an underpayment in the annual tax return — it is worth taking this into account when planning expenses.
Retirement and disability pensioners
People receiving retirement or disability pensions can also use the new options. Previously they had to file an EPD-18 application with ZUS (Social Insurance Institution) for the tax advance to be withheld without the tax-reducing amount, so that they could file a PIT-2 statement with their employer.
Since 2023 retirement and disability pensioners can split the tax-reducing amount between the pension authority and the employer. The pension authority applies 1/12 of the tax-reducing amount automatically, unless the pensioner files a statement with it on applying 1/24 or 1/36 of that amount or an application to waive the reduction (Article 31b(4) of the PIT Act). A PIT-2 statement for the remaining part is then filed with the employer, so that the total does not exceed 1/12.
| Taxpayer's situation | Option to split the amount | Documents required | Notes |
|---|---|---|---|
| Employment only | Yes, up to 3 payers | PIT-2 with employers | Full flexibility |
| Employment + business | Yes, up to 3 payers | PIT-2 with employers | One amount of PLN 3,600 in PIT-36 |
| Employment + pension | Yes, split possible | PIT-2 with the employer + statement at ZUS (1/24 or 1/36) | New mechanism |
| Pension only | Automatically | No additional documents | No change |
Employers' obligations and deadlines
Employers have specific obligations relating to taking into account the statements and applications filed by employees. The rules precisely regulate the deadlines by which payers must take the documents received into account.
Under Article 31a(5) of the PIT Act, if a taxpayer files a statement or application with a payer that affects the calculation of the advance, the payer must take it into account no later than from the month following the month in which it was received.
Employers must take PIT-2 statements into account no later than from the month following the month in which the document was received. Pension authorities have a longer deadline and must take statements into account no later than from the second month after receipt
The exception to this rule is pension authorities, which have a longer deadline for taking statements into account. They must take the documents received into account no later than from the second month following the month in which they were received.
These deadlines are crucial for tax planning. Taxpayers filing statements in the middle of the year must bear in mind that the changes in calculating advances will take effect only in the following month. This means planning ahead, especially when changing employers or modifying existing statements.
Control and taxpayers' responsibility
Despite its greater flexibility, the new system places more responsibility on taxpayers for applying the tax-reducing amount correctly. It is crucial to understand that it is the taxpayer, not the employer, who is responsible for observing the limits and filing statements correctly.
The basic rule is not to exceed the monthly limit of PLN 300. Taxpayers must check themselves that the total tax-reducing amount applied by all payers does not exceed this limit. If it is exceeded, the difference will be added as an underpayment in the annual tax return.
Responsibility for filing true statements and not exceeding the tax-reducing amount limit lies solely with the taxpayer. Employers are not obliged to verify statements filed with other payers
Taxpayers should keep accurate records of all PIT-2 statements filed, including which payers they authorised to apply the tax-reducing amount and to what extent. It is particularly important to update this information when changing employers or modifying existing contracts.
If in doubt about the correct split of the tax-reducing amount, taxpayers can use the help of accounting firms or consult tax advisers. This helps to avoid an unexpected additional payment in the annual tax return.
Benefits for different groups of taxpayers
The changes benefit practically all groups of taxpayers, but they are particularly important for people with varied forms of employment.
People with several jobs
The greatest beneficiaries of the new rules are people with several jobs, who previously could indicate only one employer to apply the tax-reducing amount. They can now split this amount optimally between a maximum of three payers, which allows them to make better use of the tax reliefs available to them.
The flexibility of the new system means that people with several jobs can adapt the split of the amount to their individual needs. They can assign a larger part of the amount to the payer paying the higher salary, or split it evenly between all employers.
Students and young workers
Students combining study with work, often under civil-law contracts with different employers, have also benefited significantly from the changes. Previously they were often excluded from applying the tax-reducing amount; now they can manage their tax burden optimally.
Freelancers and specialists
People providing services under civil-law contracts for various clients have gained the option of applying the tax-reducing amount during the year. Previously they had to wait for the annual settlement to use the tax-free amount.
Tax planning and optimisation
The new rules create opportunities for more advanced tax planning. Taxpayers can now approach the use of the tax-reducing amount strategically, adapting it to their financial needs during the year.
A key element of planning is analysing the structure of income and choosing the optimal way of splitting the tax-reducing amount. Taxpayers should consider the following factors:
- The level of salary with each employer
- The regularity of payments and stability of employment
- Planned changes in their professional situation
- Other sources of income and their impact on the tax burden
Making optimal use of the tax-reducing amount requires an analysis of the whole year's tax situation. Taxpayers should take into account all sources of income and planned changes in employment when deciding how to split the amount
An important advantage of the new system is the option of modifying statements during the year. Taxpayers can withdraw and refile PIT-2 statements depending on changes in their professional situation. This flexibility allows the tax strategy to be adjusted to current needs on an ongoing basis.
