Tax-free amount – not for all

Tax-free amount – not for all

A change in the law on income tax from individuals (Dz.U.2016.2032) has entered into force with effect as of 1 January 2017. The result of this change are amended rules on taking into account tax-free amount for the calculation of income tax payments. And so, in the case of workers whose incomes:

• do not exceed the amount representing the upper limit of the first compartment of the tax scale, i.e. currently 85 528 zł – the amount decreasing the income tax will amount to 556.02 zł per year. This means that the advance tax will be calculated in the same manner as before; based on statement PIT-2 already filed, the employer will reduce the monthly advance tax of 46,33 zł;
• exceed an amount representing the upper limit of the first compartment of the tax scale, i.e. current 85 528 zł – the employer will not decrease advance payments; however, employees whose income does not exceed the amount of 127 000 zł, will be able to reduce the amount decreasing the tax on an annual basis at a lower level than before; exact formula to calculate the tax-free amount can be found in the attached resolution;
• exceed the amount of 127 000 zł – will not be entitled to calculate the tax-free amount at all.

Hence, there is a risk that employees who exceed the upper limit of the first compartment of the tax scale (85 528 zł), and submitted previously statement PIT-2, will have to return to the Tax Office the previously deducted tax-free amounts (in whole or in part), on the basis of the annual tax declaration for the whole tax year. In order to avoid this risk, the employee may submit a statement, which will inform about the expected tax threshold. Such a declaration will be effective from the next month following the date of the document and will apply for the entire tax year. Consequently, starting from next month, the employer will not reduce the advance tax payments by 1/12 of the tax-free amount. This will allow the employee to avoid subsequent refund to the tax Office wrongly deducted tax-free amounts that reduced the income tax.

Author:

Marta Walędziak-Skowrońska
Legal Advisor

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