On August 19, 2026, Prime Minister Donald Tusk and Minister of Finance Andrzej Domański presented an outline of changes to income taxes that are to come into effect on January 1, 2027. Before we get into the details, it is worth noting that we are talking about political announcements at this point, not about applicable or even pending law.
The bill is not scheduled to be submitted to the Sejm until the end of September, and according to the established case law of the Constitutional Tribunal, changes to annual taxes must be announced no later than one month before the start of the tax year, i.e., by November 30, 2026. The timetable is tight, and there is also the announced opposition from some in the presidential circle. When reading this overview, it is worth remembering that the final version of the regulations (if they are enacted) may differ from what was presented at the press conference.
Three stakes instead of two
The most significant change is the transformation of the current two-tier personal income tax scale into a three-tier scale. Currently, income up to PLN 120,000 is taxed at a 12 percent rate, and the excess above that amount at a 32 percent rate. The proposal raises the first threshold to PLN 130,000 and introduces an intermediate bracket between the current rates: income from PLN 130,000 to PLN 150,000 would be taxed at a 24 percent rate, while the 32 percent rate would apply only to the excess above PLN 150,000.
A taxpayer whose annual tax base does not exceed PLN 120,000, in practice earning up to approximately PLN 11,900 gross per month from an employment contract, will not experience any change at all. Above this level, the benefit increases. At a gross monthly salary of PLN 12,000, it amounts to approximately PLN 250 per year, at PLN 13,000, it's approximately PLN 2,100, at PLN 14,000, it's nearly PLN 3,000. Above PLN 15,000 gross per month, the benefit reaches a maximum of PLN 3,600 per year and remains at this level regardless of further income increases. For married couples filing jointly, the total benefit can reach PLN 7,200 per year. The Ministry of Finance estimates the number of beneficiaries at 3.5 million taxpayers.
The tax-free amount remains unchanged
The package does not include an increase in the tax-free allowance, which remains at PLN 30,000, unchanged from 2022. Therefore, the package in its current form provides no benefit to taxpayers with the lowest incomes. Increasing the tax-free allowance would benefit all taxpayers. Shifting the threshold only benefits those who actually exceed it.
CIT increases for large entities
On the revenue side of the budget, a key element is the increase in the corporate income tax rate from 19 to 22 percent. The increase is not universal. It will apply to taxpayers with annual revenues exceeding €50 million (approximately PLN 200 million), as well as all tax capital groups, regardless of size. The 9 percent rate for small taxpayers and the lump sum tax on corporate income, known as Estonian corporate income tax, will remain unchanged.
The Minister of Finance justified the change by referring to the EU average, citing Slovakia, which raised its corporate income tax to 24 percent. Estimates of the additional budget revenue from this increase hover around PLN 8.6 billion annually. The scope of the tax is broader than the common association with "foreign corporations" suggests. It is estimated that the revenue threshold exceeds over four thousand domestic companies, and the increase could affect two-thirds of companies listed on the Warsaw Stock Exchange.
From a tax practice perspective, the threshold's design raises concerns. The criterion is based on revenue, not income, even though income remains the subject of taxation. In practice, the application of a higher rate is determined by turnover, not profitability. This will be most severely felt in industries with high turnover and low margins, including trade, transport, distribution, construction, and the fuel industry, where an entity with a margin of a few percent will be treated identically to an entity with a margin of several or several dozen percent. Furthermore, in the absence of a mechanism smoothing the transition between rates, exceeding the threshold by a symbolic amount increases the rate on total income. This solution creates an economic incentive for restructuring activities, which the tax authorities may subsequently challenge under the anti-tax avoidance clause.
Lump sum: the deepest interference in the situation of entrepreneurs
The most significant element of the package, at least for sole proprietorships and smaller partnerships, is the eight-fold reduction in the revenue limit entitling to the lump sum tax on recorded revenue, from the current €2 million to €250,000, or approximately PLN 1 million annually. This represents a return to the legal status prior to January 1, 2021.
The scale of the population potentially affected by this change is significant. After the 2021 tax limit was raised, the flat-rate tax was no longer a niche solution, as the number of taxpayers filing PIT-28 increased from approximately 1.3 million in 2020 to over 2 million in 2024, a roughly sixty percent increase. Entrepreneurs account for over a million people in this group.
The financial consequences of losing the right to a flat-rate tax are incomparably greater than the benefits of a reduced personal income tax rate. A business owner with revenues of around PLN 1.2 million, currently taxed at an 8.5 percent rate, will pay tens to over a hundred thousand zlotys more annually after switching to a flat-rate tax. After switching to a tax scale, the difference could reach as much as two hundred thousand zlotys, depending on the level of tax-deductible costs.
Unlike the new personal income tax scale, the cliff effect is real in the flat-rate tax. Exceeding the income limit does not result in a higher rate than the excess, but rather in the loss of the right to the entire taxation form from the following tax year. Government announcements so far do not include any mechanism for gradually reaching the new limit or any acquired rights for taxpayers using the flat-rate tax in 2026.
Solidarity tribute above
The fourth element of the package is an increase in the solidarity levy rate from 4 to 5 percent. The levy applies to income exceeding PLN 1 million annually, and only the rate, not the structure itself, is being modified. From a budget revenue perspective, this is the least significant element, clearly symbolic in nature, emphasizing that some of the costs of the reform are borne by the wealthiest taxpayers.
What was missing from the package
What's not included is just as important as the content of the announcements. Aside from the tax-free allowance, the package doesn't include any changes to health insurance contributions, leaving the full picture of business burdens incomplete. There's also no mechanism for automatic indexation of tax brackets, even though the problem the change is intended to address is the gradual shift of successive taxpayer groups into higher rates due to rising nominal wages. Without indexation, this phenomenon will likely recur within a few years.
The package also fails to address any proposals to simplify the system. Instead, it adds a single threshold to the personal income tax (PIT) and a single rate to the corporate income tax (CIT). Further provisions will be added to tax laws, further complicating taxpayers' lives.
Until the draft bill is published, all of the above conclusions remain an analysis of political announcements, not applicable law. However, given the tight legislative timeline resulting from the constitutional requirement for an appropriate tax vacatio legis, entrepreneurs, especially those currently using the flat-rate tax on revenues exceeding PLN 1 million, are advised to conduct a preliminary analysis of alternative taxation options now in case the announced change comes into effect in its current form.
This article is for informational purposes only and does not constitute legal advice.
The law is current as of August 21, 2026.
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