Tax-free allowance in Poland 2026 — how much it is and who benefits in JDG

The tax-free allowance in Poland is 30,000 PLN — the amount of income you don't pay income tax on. But it doesn't mean the first 30,000 PLN you earn is "free." It works differently than most people think.

This guide explains how the tax-free allowance works in practice for a sole proprietorship (JDG), who benefits from it, and who loses money because of it.

How much is the tax-free allowance in 2026?

30,000 PLN per year — the tax-free allowance on the tax scale (general rules). It reduces your tax by 3,600 PLN per year (300 PLN per month).

This has been a fixed amount since 2022 (Polish Deal). It has not changed in 2026.

How it works in practice

The tax-free allowance is not money you receive. It's a mechanism that reduces your tax. Here's how:

1. You calculate the tax on your income (12% up to 120,000 PLN, 32% above)
2. You subtract 3,600 PLN (the tax-reducing amount)
3. If the result is below zero — your tax is 0 PLN

Example: income of 20,000 PLN per year

• Tax before allowance: 20,000 × 12% = 2,400 PLN
• Tax-reducing amount: −3,600 PLN
• Tax to pay: 0 PLN (because 2,400 − 3,600 < 0)

Example: income of 50,000 PLN per year

• Tax before allowance: 50,000 × 12% = 6,000 PLN
• Tax-reducing amount: −3,600 PLN
• Tax to pay: 2,400 PLN

Example: income of 120,000 PLN per year

• Tax before allowance: 120,000 × 12% = 14,400 PLN
• Tax-reducing amount: −3,600 PLN
• Tax to pay: 10,800 PLN

Who can use the tax-free allowance?

The tax-free allowance applies only on the tax scale (general rules). If you are on:

• Tax scale — yes, you have a 30,000 PLN allowance ✓
• Flat tax (19%) — no, no tax-free allowance
• Lump sum (ryczałt) — no, no tax-free allowance

This is one of the most important differences between tax forms. If your income is low, the tax scale with the allowance can be cheaper than flat or lump sum — even though the percentage rate (12%) is higher.

Tax-free allowance and PIT-2

PIT-2 is a statement you file with your employer to reduce your monthly tax advances by 300 PLN (1/12 of the tax-reducing amount).

• Employee — you file PIT-2, your employer deducts less tax each month
• JDG on tax scale — the reducing amount is automatically included in monthly advances
• Two income sources — you file PIT-2 with only one payer

⚠️ Important: You deduct the tax-free amount only once. If you have income from employment and from JDG, you get one combined tax-reducing amount of 3,600 PLN — not two.

Tax-free allowance and tax forms in JDG

This is a key decision. Your choice of tax form determines whether you benefit from the allowance:

Tax scale — you benefit from the allowance

• Tax-free amount: 30,000 PLN
• Tax-reducing amount: 3,600 PLN per year
• Youth relief (under 26) also applies — zero tax up to 85,528 PLN (employment only, not JDG)
• Joint settlement with spouse possible (double allowance: 60,000 PLN)

Flat tax — no tax-free allowance

• 19% rate from the first zloty
• No tax-free amount, no tax-reducing amount
• Cannot settle jointly with spouse
• Profitable at high incomes (above 120,000 PLN)

Lump sum (ryczałt) — no tax-free allowance

• Tax on revenue (no costs deducted), rates from 2% to 17%
• No tax-free amount
• Profitable with low costs

Quick rule: If your income is below roughly 80,000 PLN per year, the tax scale with the allowance is usually cheaper than flat tax. Higher up — it depends on costs.

Tax-free allowance and joint settlement with spouse

If you settle jointly with your spouse, the tax-free allowance doubles:

• Combined: 60,000 PLN tax-free
• Combined: 7,200 PLN tax-reducing amount

But note — joint settlement is possible only on the tax scale. Flat and lump sum don't allow it.

Conditions for joint settlement

• Marriage lasting the entire tax year
• Joint property (or separation by agreement/law)
• Both spouses on the tax scale
• Combined income on the tax scale

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FAQ

Is the tax-free amount the same as the tax-reducing amount?

No. The tax-free amount (30,000 PLN) is the amount of income you theoretically don't pay tax on. The tax-reducing amount (3,600 PLN) is the amount you subtract from your calculated tax. Two different concepts describing the same mechanism.

Does the lump sum (ryczałt) have a tax-free allowance?

No. The lump sum (ryczałt) has no tax-free allowance. Tax is calculated from the first zloty of revenue, at a rate depending on your business type (2%-17%).

Does the flat tax (19%) have a tax-free allowance?

No. The 19% flat tax has no tax-free amount and no tax-reducing amount. Tax is calculated as 19% of all income.

How much is the tax-free allowance for people under 26?

For people under 26 on an employment contract or mandate contract, the PIT-0 relief applies — zero tax up to 85,528 PLN per year. In JDG, this relief does not apply — business activity is excluded from it.

Does unregistered business activity benefit from the tax-free allowance?

Unregistered activity (revenue up to 75% of minimum wage) is fully tax-exempt within the monthly limit, but this is not a "tax-free allowance" in PIT terms. It's a separate, simplified tax regime.

Legal basis

• Tax-free and tax-reducing amount: Personal Income Tax Act, art. 27f — Dz.U. 2025 poz. 163
• Tax scale rates: Personal Income Tax Act, art. 27 ust. 1 — same act
• Youth relief (PIT-0): art. 21 ust. 1 pkt 148 — applies only to employment and mandate contracts, not JDG
• Joint settlement with spouse: art. 6 ust. 8 — applies to the tax scale

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