Polish Order: Relief for the middle class – working pensioners will not benefit from it

The Polish Deal will come into force in 2022. Among the changes, there is a new tax relief – for the middle class, which is to compensate for changes in the settlement of health insurance contributions. However, the rulers excluded from this preference, among others retirees. Employees and pensioners will not be able to take advantage of the tax relief.

Relief for the middle class not for everyone

The new relief will come into force in 2022, so it will be possible to calculate it only in the declaration submitted in 2023. Only:

  • persons employed under an employment contract
  • entrepreneurs running a business and settling accounts on general terms

The following will not benefit from the relief:

  • retirees earning income from their retirement pension
  • contractors
  • persons receiving revenues from contracts for specific work

Polish Order: Relief for the middle class – who will benefit from it and how to calculate it? – PIT.pl

Working pensioner and relief for the middle class

Until now, pensions have been subject to a tax reduction amount of PLN 43.76, which was deducted by ZUS. In a situation where, after the New Year, a pensioner would submit a declaration to the employer about calculating the allowance for the middle class, it would be charged twice, this would entail the need to pay the tax on an annual basis. In such a situation, when a working pensioner calculates the relief for the middle class, the employer will have to pay extra to PIT about PLN 5,100.

Polish Order: How much health insurance premiums will entrepreneurs pay in 2022? – PIT.pl

A relief for the middle class

According to the decision of the governing bodies, only employees and persons conducting business activity taxed under general rules will benefit from the relief for the middle class.

The taxpayers who receive revenues in the amount of

mixed in the range

  • from PLN 68,412 to PLN 133,692
  • (respectively monthly – for the purpose of calculating monthly tax advances – in the amount from PLN 5,701 to PLN 11,141).

Tax-free pension only for those receiving the lowest benefits

Pensioners will only receive a tax relief by ZUS, and because it will exceed the tax due, pensioners with a low pension will not pay the tax. However, in a situation where the working pensioner will also be charged the relief by the employer to the pensioner in 2023, he will have to return the aforementioned PLN 5,100.

The employer will be obliged to take into account the allowance for the middle class already at the stage of calculating the monthly advance payments for personal income tax in accordance with Art. 32 sec. 2a of the PIT Act. Taxpayers will be able to submit an application for income not to be reduced by the amount of the employee allowance under paragraph 2a, the payer does not reduce the income at the latest from the month following the month in which he received the application. The application will be submitted separately once a year in accordance with Art. 32 sec. 2b of the PIT Act.

Middle class relief not for retirees

Source: shutterstock

When calculating the amount of income, the employer will take into account only his own remuneration (settled by him and paid to the taxpayer). Therefore, several payers will apply the tax relief independently. Therefore, it will be important to declare that the tax has not been applied at the stage of advance payments, so as not to pay the tax extra for the annual settlement.

The basis for the relief is the value of the taxpayer’s income, i.e. the gross amount.

Gross revenue amount

The amount of the discount

up to PLN 68,411.99

not entitled to

from PLN 68,412 to PLN 102,588,

(revenue x 6.68% – PLN 4,566) ÷ 0.17

from PLN 102,588.01 to PLN 133,692

(income x (-7.35%) + PLN 9 829) ÷ 0.17, for A higher than PLN 102 588 and not exceeding PLN 133 692

133,692.01 PLN

not entitled to

Source: PIT.pl own study

Who will benefit from the Polish Lada?

The analyzes show that people with a new tax-free pension will benefit the most from the changes under the Polish governance, i.e. approximately PLN 2,500 gross a month (PLN 30,000 a year). However, people who receive a pension in the amount exceeding PLN 4,500 gross per month (i.e. PLN 54,000 annually) will already feel a loss. In practice, only some of the retirees will benefit from the Polish order. People who receive a retirement pension and work, will not earn and will not deduct the allowance for the middle class from their full-time income. As indicated by tax advisor Mariusz Korzeb: The Senate proposed that the middle class relief should also be extended to retirees. However, the Sejm rejected the amendment. Consequently, the middle class allowance will only apply to income from work. Therefore, people with a high pension exceeding PLN 4,500 gross will pay more in terms of health insurance contributions. The negative effects of a higher health insurance premium may, however, be offset by an increase in the tax-free amount and an increase in the tax threshold in the tax scale.

Polish Order: Retirement pension without PIT passed. How much will your retirement or disability pension increase? – PIT.pl

Polish Order. How much will retirees and pensioners gain? – PIT.pl

Polish Government Pensions Relief for the middle class Your e-PIT Taxes 2022 Deductions in PIT Labor code Working time Minimum wage

About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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