Poland approves 2027 draft budget and adds 24% tax bracket in PIT reform

New three-tier income tax structure

The Polish government adopted draft legislation introducing a three-tier personal income tax scale scheduled to take effect on 1 January 2027. Under project UD458, the first tax threshold rises from 120,000 to 130,000 zlotys while maintaining the 12% rate after deducting the 3,600 zloty tax-reducing amount. A newly established intermediate rate of 24% applies to annual earnings between 130,000 and 150,000 zlotys. Incomes exceeding 150,000 zlotys will face the top rate of 32%, shifting the highest bracket threshold upward by 30,000 zlotys. The tax-free allowance remains unchanged at 30,000 zlotys, and the 9% health contribution continues to apply across standard taxation. Finance Minister Andrzej Domański announced the package following the cabinet session.

During today's government meeting we adopted an entire package of tax bills, including changes to PIT rates. We are raising the first threshold to 130,000 zlotys and introducing an intermediate rate of 24% up to 150,000 zlotys, which means that the highest tax rate of 32% will apply after exceeding 150,000 zlotys.

Corporate levies and financing mechanisms

The Finance Ministry estimates that the tax adjustments will benefit at least 3.5 million taxpayers, reducing the proportion of earners in the top 32% bracket from 14% to roughly 7.2%. The greatest financial relief targets gross monthly salaries between 11,880 and 14,780 zlotys, yielding maximum individual savings of up to 3,600 zlotys annually. To finance the personal income tax reduction, the government plans to raise the corporate income tax rate from 19% to 22% for companies and tax groups generating over 50 million euros in annual revenue. The solidarity levy applied to individual earnings above 1 million zlotys will rise from 4% to 5%, while the annual revenue ceiling for lump-sum taxation drops from 2 million euros back to 250,000 euros. Over a ten-year horizon, the state budget is projected to lose nearly 57.7 billion zlotys from the PIT revisions, while total public revenue increases by almost 26.5 billion zlotys due to higher inflows into the National Health Fund and local governments.

Fiscal parameters of the 2027 budget

Alongside the tax reform, the Council of Ministers approved the complete 2027 draft state budget ahead of the constitutional deadline to submit it to the Sejm before the end of September. The budget establishes state spending at 977.6 billion zlotys and forecasts total revenue at 695.0 billion zlotys, resulting in a deficit ceiling of 282.6 billion zlotys. Macroeconomic assumptions in the budget project annual gross domestic product growth of 3%. Total tax revenues are budgeted at 622.4 billion zlotys, an increase of 57.8 billion zlotys over the 2026 forecast execution. Projected tax collections include 363.7 billion zlotys from VAT, 100.1 billion zlotys from excise duty, 94.6 billion zlotys from CIT, and 33.4 billion zlotys from PIT.

Political debate and presidential friction

Prime Minister Donald Tusk publicly urged President Karol Nawrocki to approve the tax adjustments once they pass through the Sejm and Senate. Tusk stated that the changes provide tangible relief to millions of citizens and should not be blocked by political disputes between the presidency and the cabinet. Presidential cabinet chief Paweł Szefernaker criticized the proposal on social media, arguing that the three-tier scale adds administrative complexity instead of fulfilling campaign pledges to raise the tax-free allowance to 60,000 zlotys. Szefernaker referenced an alternative proposal submitted by Nawrocki on 8 August 2025, which envisioned raising the single threshold to 140,000 zlotys and eliminating PIT for families with two or more children. Meanwhile, opposition party Law and Justice submitted a competing parliamentary bill that seeks to lift the second bracket to 180,000 zlotys.

I would very much like the president's decisions to serve the people. I have no illusions about the president's attitude toward the government, but people cannot pay for that. That is why I hope that the effective tax reduction for up to 3.5 million Polish women and men is a sufficient argument for the president's signature to appear under this bill.