The thermal modernisation relief (ulga termomodernizacyjna) has been undergoing significant changes since 2025, which affect the possibilities of deducting expenses on work improving the energy efficiency of residential buildings. The new rules both extend the catalogue of eligible expenses and restrict some heating technologies. Taxpayers planning thermal modernisation investments should study the new rules carefully to make effective use of the available tax benefits.
The thermal modernisation relief allows you to deduct from income expenses on thermal modernisation work on a single-family residential house. The maximum deduction is PLN 53,000 and applies to all thermal modernisation projects carried out in buildings owned by the taxpayer
Basic rules of the thermal modernisation relief
The thermal modernisation relief is a tax instrument that reduces annual PIT (personal income tax) by deducting expenses on thermal modernisation work. It can be used only by owners or co-owners of single-family residential houses that have been put into use.
According to the definition in the Construction Law (Prawo budowlane), a single-family residential building is a detached building or a semi-detached, terraced or group building serving housing needs and constituting a structurally independent whole. In such a building, no more than two residential units, or one residential unit and one commercial unit with a total area not exceeding 30 percent of the total area of the building, may be separated.
Thermal modernisation expenses are deducted in the tax return for the year in which the taxpayer incurred them (Article 26h(6) of the PIT Act). The deduction cannot be freely moved to a later year – only the part not covered by income is carried forward to the following years
The relief mechanism allows the unused part of the deduction to be carried forward to the following years. If the deduction exceeds the taxpayer's income in a given year, the remaining part can be deducted in the following years, but for no longer than 6 years, counting from the end of the tax year in which the first expense was incurred.
An important limitation under the tax scale is that the thermal modernisation relief cannot be deducted from tax-free income. This means that if, after applying the relief, the taxpayer's income falls below the tax-free amount of PLN 30,000, that part of the relief is lost for good. Other preferences, such as the return relief, work as an income exemption rather than a deduction.
Conditions for using the thermal modernisation relief
A taxpayer intending to use the thermal modernisation relief must meet a number of formal and substantive conditions. The basic requirement is being the owner or co-owner of a single-family residential house. Thermal modernisation expenses can be deducted only in the annual tax return for the year in which they were incurred.
The relief can be deducted from taxable income under the tax scale (12% and 32%) or the flat 19% tax (podatek liniowy) in the annual returns PIT-37, PIT-36 and PIT-36L. Taxpayers paying the flat-rate tax on recorded revenue (ryczałt) can deduct the expenses from revenue in the PIT-28 return. In all cases, the PIT/O schedule (the form listing deductions) must be attached. What the return looks like for someone combining a business with a job is shown under the annual PIT return for business and employment income.
The thermal modernisation project must be completed within 3 consecutive years, counting from the end of the tax year in which the first expense was incurred. Failure to meet this deadline means that the amount previously deducted must be added back to income
A key aspect is determining when an expense is incurred, which for personal income tax purposes is the date the invoice is issued. All expenses must be documented with invoices issued by a seller who is an active VAT taxpayer, i.e. not using the VAT exemption.
- Prepare documentation for the planned thermal modernisation work
- Choose contractors who are active VAT taxpayers
- Check that the planned expenses comply with the applicable catalogue
- Carry out the work on a schedule that ensures completion within 3 years
- Collect invoices documenting the expenses incurred
- Enter the deductions in the annual tax return for the relevant tax year
Documenting expenses and limitations
A taxpayer settling thermal modernisation expenses uses the gross amount from the invoice, unless they deducted the VAT in their business activity. An important limitation is that expenses already included in tax-deductible costs of a business cannot be deducted from income. Business costs and annual returns of business owners are handled by our accounting firm in Warsaw.
Special rules apply when funding is received from the National Fund for Environmental Protection and Water Management or the voivodeship funds for environmental protection and water management. In such cases (e.g. a grant from the Clean Air programme (Czyste Powietrze)), the taxpayer can deduct only the difference between the expenses incurred and the funding received. The same applies to expenses refunded to the taxpayer in any other form (Article 26h(5)(1)).
The maximum deduction is PLN 53,000 and applies jointly to all thermal modernisation projects carried out in the individual buildings owned by the taxpayer. This amount applies per taxpayer regardless of the number of projects carried out
An additional obligation is to add the previously deducted expenses back to income if they are refunded after the year in which the deduction was made. The amount is added back for the tax year in which the taxpayer received the refund. A similar add-back applies to an early IKZE withdrawal.
| Situation | Settlement method | Deduction limit | Notes |
|---|---|---|---|
| Sole owner | Full amount of expenses | PLN 53,000 | Per taxpayer |
| Spouses – separate property | Each up to the full limit | PLN 53,000 each | Separate limits |
| Spouses – joint property | Split by agreement | PLN 53,000 each | Any proportion |
| Co-ownership | According to expenses actually incurred by each | PLN 53,000 each | Not according to shares |
Spouses and the thermal modernisation relief
Special rules apply to spouses who co-own a single-family house. With separate property, each spouse can deduct up to the full limit of PLN 53,000, which applies individually to each spouse.
With joint marital property, spouses have more flexibility in settling the expenses. They can each deduct half of the expenses, according to the amount of expenses attributable to each of them, or one spouse can deduct them in any proportion. Regardless of the chosen split, the limit of PLN 53,000 applies to each spouse separately.
Spouses with joint marital property can flexibly split the thermal modernisation deductions between themselves, but the total deductions cannot exceed the sum of their individual limits of PLN 106,000
A married couple co-owning a single-family house spent PLN 80,000 on thermal modernisation. With joint property, they can decide that each deducts PLN 40,000, or one spouse can deduct PLN 53,000 and the other PLN 27,000, making full use of the available limits.
Key changes to the catalogue of expenses from 2025
The most important change introduced from 1 January 2025 is the modification of the catalogue of expenses eligible for deduction under the thermal modernisation relief. The changes were introduced by the Regulation of the Minister of Development and Technology of 19 December 2024 (Journal of Laws (Dz.U.) 2024 item 1943) and apply for the first time in the annual tax returns for 2025, filed in 2026. The consolidated text of the catalogue was published in Dz.U. 2025 item 1128 – it also applies in this wording in 2026.
The most significant change is the removal of condensing gas boilers and condensing oil boilers, together with their installation, from the catalogue of eligible expenses. This means that from 2025, expenses on buying and installing these heating appliances cannot be deducted under the thermal modernisation relief.
From 2025, condensing gas boilers, condensing oil boilers and gas and oil tanks have been removed from the catalogue of eligible expenses. Taxpayers planning investments in these technologies will not be able to use the thermal modernisation relief
At the same time, the catalogue was extended, increasing the possibilities of using the relief. Roofs were added explicitly to the building materials used for insulation (alongside building partitions, balcony slabs and foundations), which removes doubts about the scope of work covered by the relief. The heat exchanger substation was supplemented with an automatic weather-compensated control system, which underlines the focus on modern energy management systems.
Important changes also concern renewable energy technologies. For heat pumps, solar collectors and photovoltaic cells, the former "accessories" (osprzęt) were replaced with infrastructure necessary for their operation, which allows a wider range of expenses related to installing these systems to be deducted.
New items in the catalogue of materials and equipment
The catalogue of building materials and equipment eligible for deduction has been extended with new items reflecting the development of energy-saving technologies. Energy storage and heat storage together with the infrastructure necessary for their operation were introduced, allowing taxpayers to deduct expenses on modern energy storage systems.
Another new item is the energy management system, which makes it possible to optimise energy consumption in a residential building. This technological solution is gaining importance in the context of the growing popularity of photovoltaic installations and other renewable energy sources.
The new catalogue includes energy storage, heat storage and energy management systems together with the necessary infrastructure. These modern technological solutions can be deducted under the thermal modernisation relief from 2025
As regards external joinery, external doors were added to the catalogue of eligible items, extending the possibilities of replacing elements that affect the insulation of the building. The connection to the gas network was limited to a gas network using biogas or biomethane as its energy source, which underlines the environmentally friendly direction of the changes.
- Materials for roof insulation as a new item in the catalogue
- Automatic weather-compensated control systems for heat exchanger substations
- Infrastructure necessary for the operation of heat pumps
- Infrastructure necessary for the operation of solar collectors
- Infrastructure necessary for the operation of photovoltaic cells
- Energy storage and heat storage with infrastructure
- Energy management systems
- External doors in the catalogue of eligible joinery
Changes in the catalogue of thermal modernisation services
The catalogue of deductible services has also been significantly modified. Insulation services were extended to include roof insulation, which corresponds to the changes in the catalogue of building materials. The service of installing a heat exchanger substation together with a temperature programmer and an automatic weather-compensated control system was also added, underlining the importance of automation in heating systems.
An important change is the removal of the installation of condensing gas boilers and condensing oil boilers from the catalogue of services. Taxpayers planning to install these appliances from 2025 will not be able to deduct the cost of their installation under the thermal modernisation relief.
The installation of condensing gas boilers and condensing oil boilers has been removed from the catalogue of eligible services. At the same time, services related to roof insulation and the installation of energy management systems were added
Services related to renewable technologies were extended. The installation of a heat pump, solar collector and photovoltaic installation was supplemented with the infrastructure necessary for the operation of these systems. The installation of energy storage or heat storage and the installation of energy management systems were also added.
A new service in the catalogue is making a connection to a gas network using biogas or biomethane as its energy source (and to a district heating network) – previously the catalogue of services did not list making a connection, and a general connection to the gas network appeared only in the list of materials and equipment. This change reflects the aim of promoting environmentally friendly energy sources.
- Check the catalogue of expenses applicable in the year the expenses are incurred
- Verify whether the planned work falls within the eligible catalogue
- Choose contractors with the status of active VAT taxpayers
- Document all expenses with invoices meeting the formal requirements
- Monitor the progress of work to ensure completion within 3 years
- Prepare documentation for the annual settlement for the relevant year
Practical aspects of applying the new rules
Taxpayers planning thermal modernisation projects should take into account that the new rules apply from 1 January 2025. This means that expenses incurred in 2024 are settled under the old catalogue in the return filed in 2025, while expenses from 2025 are subject to the new rules in the 2026 settlement.
Particular attention should be paid to multi-year projects started before 2025. If a taxpayer started an investment in 2024 and planned to install a condensing gas boiler in 2025, they should remember that expenses on the boiler and its installation incurred from 2025 are not eligible for deduction.
Thermal modernisation projects started before 2025 are assessed according to the catalogue in force at the time each expense is incurred. This may mean that different elements of the same project are assessed under different rules
Taxpayers should also note the extended possibilities of deducting expenses related to infrastructure accompanying renewable energy installations. The concept of "infrastructure necessary for operation" may cover a wider range of elements than the former "accessories" – however, the regulation does not list them in detail, so it is worth assessing each expense in terms of whether it is genuinely necessary for the installation to work.
The owner of a single-family house is planning a comprehensive thermal modernisation including insulation of the walls and roof, replacement of windows, installation of a heat pump with heat storage and an energy management system. Thanks to the changes from 2025, they can deduct expenses on the heat storage and the energy management system, which were not previously covered by the relief, and roof insulation is now listed explicitly in the catalogue.
Impact of the changes on investment decisions
The changes may significantly affect the investment decisions of single-family homeowners. Removing condensing gas and oil boilers from the relief catalogue may encourage taxpayers to choose alternative heating technologies, such as heat pumps or biomass boilers.
Extending the catalogue to include energy storage and energy management systems may help popularise modern technological solutions that increase the energy efficiency of buildings. These investments, although often expensive, can bring long-term operating savings.
Changes to the catalogue of expenses may affect the profitability of different thermal modernisation technologies. Taxpayers should carry out an economic analysis taking into account the availability of the tax relief when choosing technical solutions
Another important aspect is the need to adjust investment schedules to the new rules. Taxpayers planning multi-year projects should take into account that some elements may lose eligibility during the project.
| Technology | Status until 2024 | Status from 2025 | Impact on decisions |
|---|---|---|---|
| Condensing gas boilers | Eligible | Excluded | Less attractive |
| Condensing oil boilers | Eligible | Excluded | Less attractive |
| Heat pumps | Eligible | Extended to infrastructure | More attractive |
| Energy storage | Not eligible | Eligible | New option |
| Roof insulation | Not listed explicitly (building partitions only) | Listed explicitly | Fewer doubts |
Control procedures and documentation
Taxpayers using the thermal modernisation relief should be prepared for possible checks by the tax authorities. Proper documentation of a thermal modernisation project includes not only invoices for materials and services but also design documentation, building permits (if required) and documents confirming completion of the work.
It is particularly important to document that the materials and equipment used comply with the technical requirements set out in the regulations. For biomass boilers, it is necessary to confirm compliance with the ecodesign requirements and to check that their use is not prohibited by local anti-smog resolutions.
Documentation of a thermal modernisation project should include invoices, design documentation, permits and certificates confirming that the solutions used comply with technical requirements. Proper documentation is crucial in the event of a tax audit
Taxpayers should also keep a record of the progress of work, which will help prove completion of the project within the required 3 years. Photographic documentation of individual stages may provide additional protection in case the inspecting authorities have doubts.
- VAT invoices from active taxpayers documenting all expenses
- Design documentation related to the thermal modernisation work
- Building permits or notifications of construction work (if required)
- Certificates and approvals of the materials and equipment used
- Acceptance reports for the work carried out and commissioning of installations
- Photographic documentation of individual stages
- Record of the work schedule confirming completion on time
