By John Q. Hosedrinker 
Poland’s president recently enacted a law eliminating personal income tax (PIT) for parents with at least two children, a measure designed to bolster family finances and stimulate the economy. This reform, available to families earning up to 140,000 zloty annually, is expected to provide an average of 1,000 zloty monthly relief per family. However, tax experts caution that the financial benefits will primarily favor higher-income families. While public consultations showed significant support for the initiative, the actual impact and efficacy of the “tax armour” reform, which also includes other tax adjustments, will be visible in the 2026 tax returns.
Read the original article here
Poland’s president recently proposed a significant shift in family taxation policy, sparking considerable debate. The core of this initiative is a zero income tax law for parents with two children, a move designed to offer financial relief to families and potentially address demographic concerns. It’s worth clarifying that, while the proposal has been put forward by the President, it’s still navigating the full legislative process. This means it must pass through both houses of Parliament and only then, if approved, be signed into law.
The essence of the policy centers around families earning up to 140,000 zloty annually, which equates to roughly $39,000 USD. This measure is intended to ease the financial burden on parents, especially considering the rising costs of raising children. This can be seen in comparison to the U.S., where various tax deductions and credits already exist, effectively resulting in a negative federal tax rate for some families with children. Poland’s initiative is undoubtedly a move aimed at bolstering families, considering that in the US, for a married couple with two children, you’d have a $30,000 standard deduction and a $2,000 child tax credit.
Considering the potential for the Polish population to decline, it’s easy to see the reasoning behind this law. The decline in birth rates in Germany is a pressing issue and the Polish government is taking a proactive approach. The general idea is to encourage people to have children by making it easier to do so financially. Many people feel a need for security before starting a family and financial concerns are a big contributor to the declining birth rates worldwide.
There’s the natural question of how this change might affect the government’s budget. The president’s office has stated that the plan is to tighten the existing tax system to the tune of 14 billion zloty. However, financial experts doubt that such a sum is attainable by tax tightening alone.
The income threshold is also a key factor. For many Polish families, this would certainly be a significant benefit. The median yearly income in Poland is considerably below that threshold, meaning a large portion of families could potentially benefit. It’s important to consider that the financial impact of such a policy differs depending on the context of the national economy.
There is the criticism that this law is just a political tactic, potentially aimed at boosting the popularity of the ruling party. The Polish political scene, like many, has its issues and motivations are often complex.
The debate also highlights broader discussions about family dynamics and economic stability. Some people argue that this type of policy may encourage larger families, and it’s essential to consider how it could be implemented to benefit all income groups. Giving tax breaks while running a deficit might be a concern for some, and the EU may provide financial support.
In closing, the zero income tax proposal is a bold move that is causing significant discussion in Poland. Regardless of the various arguments for and against this new law, it is clear that Poland is proactively attempting to support its families, and address potential demographic challenges. It remains to be seen how the policy will unfold as it makes its way through Parliament, and what the ultimate impact will be.