Tax Relief for Working Seniors in Poland: An Incentive to Remain Professionally Active

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Explore the tax relief scheme for working seniors in Poland, designed to incentivize them to stay professionally active by offering exemptions on income up to PLN 85,528 per year. Detailed eligibility criteria, assessment of tax benefits, and potential savings for both employees and entrepreneurs are discussed.

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Tax Tax Relief for Relief for Working Seniors Seniors as as an an Incentive to to Remain Remain Professionally Professionally Active Active the Case of the Case of Polan Poland d Working Incentive Anna Dada, University of Opole. Faculty of Economics First Annual FORTHEM conference FORTHEM For the Future March 6-8, 2024

Ways of eliminating the negative effects of the generation replacement gap focus on the increasing decline in the fertility rate motivating seniors to prolong their professional activity First Annual FORTHEM conference FORTHEM For the Future March 6-8, 2024

Premises for a senior citizen to be eligible for a tax relief The tax relief for working seniors (also referred to as PIT-0 for seniors) was introduced on 1 January 2022. It is a tool enabling tax exemption of income up to PLN 85,528 per year. However, this privilege does not apply to every senior. The rules that must be met to become eligible for the relief are included in Article 21(1)(154) of the Personal Income Tax Act. First Annual FORTHEM conference FORTHEM For the Future March 6-8, 2024

The assessment of the scope of tax benefits regarding the tax relief The aim of the work is to assess whether the tax relief (the case of Poland) offered to working seniors can be an incentive for them to remain professionally active. The assessment will be conducted from the point of view of potential tax and contribution benefits gained by senior citizens on the example of income from employment contract and business operation. First Annual FORTHEM conference FORTHEM For the Future March 6-8, 2024

Tax benefits of applying for the tax relief by the employee (PLN) Revenue (gross) for 2023 PIT without tax relief for 2023 PIT with tax relief for 2023 Savings PIT tax 42,540 445 0 445 85,528 4,896 0 4,896 120,000 8,466 0 8,466 150,000 12,859 2,896 9,963 200,000 26,666 7,893 18,773 First Annual FORTHEM conference FORTHEM For the Future March 6-8, 2024

Tax benefits of applying for the tax relief by the entrepreneur (PLN) The burden on the entrepreneur not using the relief The burden on the entrepreneur using the relief Revenue for 2023 Form of taxation Tax and contribution savings Flat rate 5.5% Flat rate 8.5% Tax scale Flat tax Flat rate 5.5% Flat rate 8.5% Tax scale Flat tax Flat rate 5.5% Flat rate 8.5% Tax scale Flat tax Flat rate 5.5% Flat rate 8.5% Tax scale Flat tax 11,470.16 14,473.16 14,360.52 19,492.63 13,916.25 17,403.39 21,600.00 27,348.89 15,566.16 19,953.16 33,900.00 34,186.09 18,316.16 24,203.16 54,400.00 45,581.82 - 10,628.20 -7,625.20 -6,600.43 1,596.90 -8,182.11 -4,694.97 -2,463.43 7,837.46 -6,532.20 -2,145.20 7,136.57 13,270.68 -3,782.20 2,104.80 23,136.57 22,326.46 22,098.36 85,528 20,960.95 17,895.73 22,098.36 120,000 24,063.43 19,511.43 22,098.36 150,000 26,763.43 20,915.41 22,098.36 First Annual FORTHEM conference FORTHEM For the Future March 6-8, 2024 23,255.36 200,000 31,263.43

The tax relief for working seniors as an incentive to remain professionally active while resigning from drawing benefits It cannot be unequivocally considered that tax relief is a significant incentive to remain professionally active. PIT-0 for seniors is rather a form of financial support than a tool motivating medium- or long- term suspension of benefits for professional activity. The main advantages of the relief boil down mainly to the financial benefits (support) of the seniors. Thanks to this tool, seniors can periodically receive tax cash benefits, and the relief partially compensates, e.g. a decrease in the generation replacement rate. First Annual FORTHEM conference FORTHEM For the Future March 6-8, 2024