The second tax threshold in Poland starts at PLN 120,000 in 2026, but that is not a figure from your contract or your invoices, it is taxable income, meaning revenue minus deductible costs and social security contributions. That distinction causes most of the confusion around this topic, because in practice you can invoice well above PLN 120,000 a year and still never pay a single złoty at the 32% rate. For a programmer or another IT specialist working on a B2B contract, the real question behind “when do I hit the second threshold” is usually a different one: whether your actual revenue and costs still make the progressive scale worth staying on, or whether it is time to switch to a lump-sum tax (ryczałt) or the flat tax (podatek liniowy).
- The second tax threshold in 2026 is PLN 120,000 of taxable income (not revenue), and the 32% rate applies only to the surplus above that amount, never to the whole income.
- The tax-free amount is PLN 30,000 a year, implemented in practice as a PLN 3,600 tax-reducing amount subtracted from tax calculated at the 12% rate.
- Ryczałt (12% for programming services) is calculated on revenue, not income, for an IT freelancer with low costs it starts beating the progressive scale already around PLN 130,000-135,000 of annual revenue, close to the threshold itself rather than well above it.
- The flat 19% tax only becomes more favorable than the scale at income levels around PLN 160,000 and up, because it has no tax-free amount and no joint filing with a spouse.
- You report your choice of taxation method for the coming year (or a change mid-business) by the 20th day of the month following the month you earn your first revenue of the year, and it cannot be changed retroactively during the year.
- What the second tax threshold actually is in 2026
- Income versus revenue, gross or net, so the terms do not get mixed up
- How much you actually need to earn to hit the second threshold
- Three taxation methods for a sole trader, side by side
- Ryczałt for a programmer or IT freelancer, when it pays off
- The 19% flat tax, when it starts beating the scale
- What you keep, a worked example for all three methods
- How and when to change your taxation method
- Common mistakes when choosing a taxation method
- Frequently asked questions
What the second tax threshold actually is in 2026
The progressive tax scale in 2026, the same as in 2022-2025, has two brackets. Up to PLN 120,000 of the tax calculation base you pay 12% minus a PLN 3,600 tax-reducing amount. Above PLN 120,000 you pay PLN 10,800 (that is 12% of the first PLN 120,000, already accounting for the tax-reducing amount) plus 32% of the surplus above that amount. This follows directly from Art. 27(1) of the Personal Income Tax Act, and, as current Ministry of Finance materials confirm, these values have not changed since 2022.
| Tax calculation base | Tax due |
| up to PLN 120,000 | 12% minus a PLN 3,600 tax-reducing amount |
| above PLN 120,000 | PLN 10,800 plus 32% of the surplus above PLN 120,000 |
The key rule people approaching the threshold usually ask about: the higher rate never applies to the whole income, only to the part exceeding PLN 120,000. At an income of PLN 140,000 you do not pay 32% of PLN 140,000, only PLN 10,800 plus 32% of the PLN 20,000 surplus, PLN 17,400 in total. Separately, the tax-free amount of PLN 30,000 a year applies regardless, meaning the first PLN 30,000 of income is effectively untaxed no matter which bracket the rest of your income falls into. It is also worth knowing the scale has a much higher third threshold: above PLN 1,000,000 of annual income a solidarity levy of 4% kicks in on the surplus above that million, calculated separately from PIT under the scale.
Income versus revenue, gross or net, so the terms do not get mixed up
This is the most common mix-up in conversations about the tax threshold, and exactly why the phrase “PLN 120,000 gross or net” shows up so often in search. The plain answer is: neither, in the everyday sense of those words. The law refers to the “tax calculation base,” and for a sole trader (JDG) on the progressive scale or the flat tax, that base is income, meaning revenue minus deductible business costs and paid social security contributions (unless those were already booked as costs). That is not your take-home amount (since you still need to subtract tax and the health contribution from income to get real net pay), but it is not the sum of all your issued invoices either (revenue in the plain bookkeeping sense).
The marginal rate above the second threshold is not 32%, it is effectively 41%, since the progressive scale also adds a 9% health contribution charged on the same income.
The practical consequence: a programmer invoicing PLN 15,000 net a month (PLN 180,000 a year) does not automatically fall deep into the second bracket. Once you subtract business costs (equipment, software, accounting fees) and full social security contributions (roughly PLN 23,000-24,000 a year with voluntary sickness insurance), real income often comes out PLN 25,000-30,000 lower than invoiced revenue. That is exactly why answering “how much do I need to earn to cross the threshold” requires calculating your own specific costs and contributions, not just the figure on your contract. It is also worth separating this mechanism from ryczałt, where the PLN 120,000 scale threshold simply does not apply at all, because there tax is calculated on revenue, covered in detail further down.
How much you actually need to earn to hit the second threshold
For someone on the progressive scale, without extra reliefs, a simplified calculation looks like this: for income (after subtracting costs and social security contributions) to exceed PLN 120,000, average monthly income needs to be above PLN 10,000. For a typical IT freelancer with low business costs (no employees, no major equipment investments) and full social security contributions, that corresponds to an invoiced revenue of roughly PLN 11,500-12,000 a month, depending on your actual costs. Someone with higher costs (a rented office, a subcontractor, expensive equipment depreciated in that year) only hits the second threshold at a higher revenue level, since more gets subtracted from the base.
Employees and people on a mandate contract (umowa zlecenie) calculate the threshold slightly differently, since their employer or client already withholds monthly advances based on gross pay minus standard deductible costs (usually PLN 250 a month for a single job) and social security contributions. In the month where cumulative income since the start of the year crosses PLN 120,000, the withholding agent automatically starts applying the 32% rate to the surplus, with no extra declaration needed from you. For a JDG the advance-payment mechanism works similarly, except you are the one tracking which month your cumulative income crosses the threshold and recalculating the advance yourself.
Three taxation methods for a sole trader, side by side
A sole trader (JDG) in Poland chooses between three realistically available taxation methods (the fixed tax card, karta podatkowa, has been closed to new taxpayers since 2022, only people who already used it and kept it continuously can still stay on it). The choice affects not just the tax rate, but also the tax base itself, the health contribution amount, and access to reliefs.
| Criterion | Progressive scale | Flat tax | Ryczałt |
| Tax base | Income | Income | Revenue |
| Tax rate | 12% and 32% | 19% (fixed) | 2%-17% by PKWiU code |
| Deductible business costs | Yes | Yes | No |
| PLN 30,000 tax-free amount | Yes | No | No |
| Joint filing with a spouse | Yes | No | No |
| Health contribution 2026 | 9% of income | 4.9% of income | fixed amount by revenue bracket |
Reporting your choice works asymmetrically: with the progressive scale you do not report anything, it is the default method if you file no declaration at all. Choosing the flat tax or ryczałt requires a written notice to the head of the tax office (or an update in the CEIDG registry) by the 20th day of the month following the month you earn your first revenue in that tax year, covered in more detail in the section on changing methods. For more on the differences across all four methods, including full ryczałt rate tables by industry, see our article on tax systems for sole traders in Poland. Choosing a PIT method is also a separate decision from VAT registration, we covered VAT rates and the exemption threshold in a separate article.
Ryczałt for a programmer or IT freelancer, when it pays off
Lump-sum tax on registered revenue (ryczałt) is especially popular among IT specialists precisely because running a sole trader business in this field tends to have low costs (a laptop, a few licenses, maybe an accounting office), while the tax rate is much lower than the scale or the flat tax. Services related to creating, developing, and implementing software (PKWiU division 62, excluding leasing) fall under a 12% rate. People providing ancillary services, for example technical support without an advisory component or manual testing without recommendations, may qualify for the lower 8.5% rate, but the line between 8.5% and 12% is often disputed, the tax office looks at the actual nature of the work performed and the PKWiU code of the specific service, not the job title written into the contract. Consulting on software, including IT management consulting, falls under a higher 15% rate.
An important limitation: ryczałt is charged on total revenue, business costs do not reduce the tax base at all. That makes ryczałt attractive at low costs and less attractive in a year with large expenses, for example buying expensive equipment or hiring a subcontractor. The health contribution under ryczałt is a fixed amount depending on annual revenue, in 2026 it is PLN 498.35 a month for revenue up to PLN 60,000, PLN 830.58 for revenue between PLN 60,000 and 300,000, and PLN 1,495.04 above PLN 300,000, and you can deduct half the paid contribution from your revenue before calculating tax. Ryczałt is only available while last year’s revenue stayed under the equivalent of EUR 2 million (PLN 8,517,000 in 2026).
Annual revenue: PLN 200,000, mainly programming services
Costs: around PLN 3,000 a year (equipment, software)
At costs this low, 12% ryczałt usually leaves more take-home per year than either the scale or the flat tax, despite its nominal rate being lower than the scale’s first bracket. The reason: the ryczałt base is technically higher (the whole revenue, no cost deduction), but the rate is low enough that it still beats the scale once income crosses into the 32% bracket, and beats the flat tax, which has no tax-free amount at all.
The 19% flat tax, when it starts beating the scale
The flat tax (podatek liniowy) is a fixed 19% rate calculated on income (the same way as the scale, after subtracting costs and social security contributions), regardless of how much you earn. There is no progression here, but there is also no tax-free amount and no joint filing with a spouse, and access to most tax reliefs is limited. The health contribution is 4.9% of income (much lower than the scale’s 9%), with a minimum monthly contribution of PLN 432.54 (in force from February 2026 to January 2027, based on 100% of the PLN 4,806 minimum wage), and you can deduct the paid health contribution from income or book it as a cost, up to an annual limit of PLN 14,100 in 2026.
Because the flat tax has no tax-free amount, at lower income levels it usually loses to the scale despite the lower nominal rate. From our own calculations for a typical low-cost IT freelancer (with full social security contributions including voluntary sickness insurance), the flat tax only starts leaving more take-home than the scale at income levels around PLN 160,000 and up, which at low costs corresponds to roughly PLN 185,000-190,000 of annual revenue. Below that point the scale wins thanks to the tax-free amount and the lower 12% rate in the first bracket. There is one more practical restriction that is easy to overlook: you cannot use the flat tax if you provide services to a current or former employer that match work you performed for them as an employee in the same tax year, which matters for anyone moving from an employment contract to their own business with the same client.
What you keep, a worked example for all three methods
The figures below are an approximate calculation for a sole trader providing programming services (12% ryczałt), with annual costs around PLN 3,000 and full social security contributions including voluntary sickness insurance (roughly PLN 23,100 a year in 2026). Your actual result depends on your real costs, reliefs, and the timing of revenue during the year, so this is a reference point, not ready-made tax advice.
| Annual revenue | Scale (12%/32%) | Flat tax (19%) | Ryczałt (12%) |
| PLN 100,000 | approx. PLN 62,000 net | approx. PLN 55,700 net | approx. PLN 58,300 net |
| PLN 150,000 | approx. PLN 100,700 net | approx. PLN 95,400 net | approx. PLN 102,300 net |
| PLN 300,000 | approx. PLN 189,200 net | approx. PLN 211,000 net | approx. PLN 234,300 net |
This shows exactly the mechanism described earlier: at PLN 100,000 of revenue the scale still wins thanks to the tax-free amount, at PLN 150,000 ryczałt already takes the lead, and at PLN 300,000 the ryczałt advantage over the scale reaches tens of thousands of złoty a year, mostly because the ryczałt health contribution does not scale up proportionally to revenue the way 9% of income does under the scale. This is a calculation for a very-low-cost profile though, if your real costs are higher (an office, equipment, subcontractors), the gap between methods looks different, and that is exactly the point where it is worth modeling your own numbers with an accountant instead of copying someone else’s example. MojaFirma’s accounting team models this comparison against your actual revenue and costs before you file a binding declaration changing your taxation method. If you are still testing out working for yourself and have not registered a JDG yet, it is worth running a similar cost comparison already at the business incubator for freelancers stage, before committing to a full business registration.
How and when to change your taxation method
Run the numbers before your first revenue of the new year, ideally with an accountant, using your real costs, reliefs, and expected revenue.
If you are choosing the progressive scale, you do not need to report anything, it is the default method.
If you are choosing the flat tax or ryczałt, file a written notice with the head of the tax office (or update your CEIDG entry) by the 20th day of the month following the month you earned your first revenue in that tax year.
If your first revenue of the year only arrives in December, you have until the end of the tax year to file the notice.
You apply your chosen method for the whole tax year, you cannot switch to a different method mid-year even if it turns out halfway through the year that the choice was wrong. You report a change for the following year only after earning your first revenue in that new year, which in practice means the decision is best made in advance, based on a revenue forecast, rather than waiting until January. People closing a business and starting a new one after a break count this deadline again from scratch, based on the first revenue of the current business.
Common mistakes when choosing a taxation method
Calculating the threshold from invoiced revenue instead of income. This is the most common mix-up covered in the income-versus-revenue section: PLN 120,000 applies to income under the scale and the flat tax, and this threshold does not apply to ryczałt at all, where total revenue is taxed at an industry rate.
Choosing ryczałt without checking the correct PKWiU rate. The 8.5% rate looks tempting, but for typical programming services (writing, developing, implementing software) the correct rate is 12%, and a wrong classification can lead to back tax plus interest for the whole period the understated rate was used.
Switching to the flat tax just because revenue crossed PLN 120,000. Crossing the scale threshold alone does not automatically mean the flat tax pays off, as the break-even section shows, at income levels just above the threshold the scale is often still more favorable thanks to the tax-free amount.
Ignoring the deadline for reporting a method change. A notice filed after the deadline (after the 20th day of the month following your first revenue of the year) means the tax office treats you as continuing your previous method for the whole year, regardless of your intentions.
Overlooking the flat-tax restriction for services to a former employer. If in the same tax year you provide services matching work you previously performed as an employee for the same entity, the flat tax is excluded, no matter how favorable it would look on paper.
Frequently asked questions
Is the PLN 120,000 threshold calculated on revenue or on income?
On income, meaning revenue minus deductible business costs and paid social security contributions, and this applies to the progressive scale and the flat tax. Under ryczałt this threshold does not apply at all, since tax there is calculated on total revenue at an industry rate.
What happens to tax in the month I cross the threshold mid-year?
The advance payment for that month is calculated proportionally: the part of income up to PLN 120,000 at 12%, and the surplus above that at 32%. From the following month, all your current income is taxed at 32% for the rest of the year, unless income drops back below the threshold the following year.
Does 12% ryczałt always pay off better than the scale for a programmer?
Not always. Ryczałt is calculated on total revenue with no cost deduction, so it mainly pays off at low business costs. If you have high costs (expensive equipment, subcontractors, a rented office), the scale or the flat tax, which both let you deduct those costs, can come out ahead despite the higher nominal rate.
Can I change my taxation method mid-year?
No. You apply your chosen method for the whole tax year. You report a change for the following year only after earning your first revenue in that new year, by the 20th day of the next month, and if your first revenue arrives in December, you have until the end of the year.
Is there a third tax threshold higher than 32%?
Formally the progressive scale only has two brackets, 12% and 32%, but above PLN 1,000,000 of annual income an additional solidarity levy of 4% applies to the surplus above that million, calculated and paid separately from PIT under the scale.
Does the flat tax always pay off above PLN 120,000 of income?
No, crossing the scale threshold alone is not enough. The flat tax has no tax-free amount, so at income just above PLN 120,000 the scale usually still wins. For a typical low-cost freelancer, the flat tax only starts leaving more take-home at income levels around PLN 160,000 and up.
Bibliography and legal basis
- Act of 26 July 1991 on Personal Income Tax (Journal of Laws 1991 No. 80 item 350, consolidated text Journal of Laws 2026 item 592), Art. 27(1) (progressive tax scale), Art. 30h (solidarity levy).
- Act of 20 November 1998 on Lump-Sum Income Tax on Certain Revenue Earned by Individuals, Art. 12 (ryczałt rates, including 12% for software-related services).
- podatki.gov.pl, guide “Starting a business,” section on taxation methods.
- Biznes.gov.pl, “How much is the health contribution” (2026 rates for the scale, the flat tax and ryczałt).
Legal status as of: August 31, 2026.
Author: Walery Kusznirski, in-house legal practitioner at MojaFirma.
This article does not constitute tax advice. Every situation is individual and depends on the taxpayer’s specific revenue, costs, and reliefs, it is worth getting an exact calculation from an accountant before filing a binding declaration on your taxation method.
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