Zero PIT in the month of turning 26 - what is worth knowing

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Zero PIT is a tribute to the government towards young people - the main goal of this solution is to try to increase the income of employees who are just starting their experience on the labor market. Zero PIT, however, is subject to strict rules, which include, for example, the criterion of the taxpayer's age. We present a zero PIT in the month you turn 26!

Work and tax settlement

Performing work on the basis of any contract (employment, specific or commissioned work) is subject to tax liability. The same is true for running your own business.

Tax is paid on the income earned - hence the name income tax. Until August 1, 2019, the taxpayer's age was basically irrelevant to the fulfillment of the tax obligation in connection with the work performed. There was one rule - if you work legally and earn income, you have to settle it in the next year by submitting an appropriate form to the appropriate tax office.

However, the beginning of August 2019 brought a lot of changes - the government then introduced a tax exemption for young people who achieve income for the first time in their lives. Thanks to the new regulations, a selected group of people is not required to submit and settle a tax declaration - this way they can save some money. Earlier, they would be deducted in connection with the need to pay advance personal income tax.

Who can take advantage of PIT zero?

The tax credit for young workers is based on the basic age criterion - only those people who receive remuneration until the age of 26 are valid.
Tax exemption also applies to work performed on the basis of:

  • employment relationship,
  • business relationship,
  • homework
  • cooperative employment relationship,
  • contract of mandate,
  • graduate apprenticeship, internship.

The amount of remuneration received also has a significant impact on the possibility of taking advantage of the said relief. An employee has the right to be dismissed, provided that his income does not exceed PLN 85,528 throughout the year - any amount obtained above this value is already subject to taxation on general principles (in this case, you will have to submit a PIT tax return and settle accounts with the tax office).

It is worth emphasizing, however, that the limit amount entitling to the use of the indicated tax relief is PLN 85,528.00 - this is due to the fact that the provisions introducing the tax exemption ...

Example 1.

An employee who is 20 years old in 2021 and has earned a total salary of PLN 20,000 will not pay the tax at all - it is within the limit of PLN 85,528.00, on which no tax is required.

Example 2.

An employee who is 20 years old in 2021 and has earned a total remuneration of PLN 95,000 will not pay tax up to the amount85 528,00  zloty. However, he will have to settle accounts with the tax office in the amount of PLN 9,472.00.

It is worth remembering that the limit of PLN 85,528 does not depend on the amount of remuneration received by the employee. In other words, if a given person is employed under several different contracts with different employers / principals, he or she must be careful about the total amount of remuneration obtained in a given tax year. If the amount limit is exceeded, PIT zero will not apply in its full amount.

Zero PIT in the month of turning 26

If an employee does not turn 26 during the tax year, we have no problem applying the exemption in question (we must always remember about the limit of the amount of the tax allowance).

But what if the employee celebrates his 26th birthday in the middle of the calendar year? Such matters will not be rare - some taxpayers are already wondering how a young employee could benefit from the tax relief in question.

The position on the above issue was taken by the Ministry of Finance. According to the official interpretation, the date of transfer of remuneration to the employee who will be 26 years old will be the most important in the whole matter.

If the payment is made before such person's birthday, you will be eligible for tax exemption. This rule will also apply when a transfer with remuneration from the employer is sent to the employee exactly on his 26th birthday.

However, if the money is sent even a day after the employee's birthday, the right to tax exemption is unfortunately forfeited, and the payer will have to deduct the income tax advance from the salary paid.

Of course, the salary charged until the month in which the employee reaches the age of 26 will be accounted for together with the tax credit. Zero PIT will not work for such a person only after crossing the age limit which entitles him to take advantage of the tax exemption.

Example 3.

The employee turns 26 exactly on July 12, 2021 and is employed by only one employer. From January 1 to July 12, 2021, the employee is entitled to use PIT zero. If the salary for July is sent by the employer by July 12 (including this date), he will also be able to benefit from tax exemption for this month. However, if the July salary is sent to his account on or after July 13, the right to zero PIT relief will expire.

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Employee profit and zero PIT

The application of the tax relief is, in practice, intended to mean large profits for young employees. According to the data provided by the Ministry of Finance:

  • with a monthly gross salary of PLN 4,765, the monthly profit from the use of the tax relief is PLN 355, which is PLN 4,261 per year,
  • with a monthly salary of PLN 7,127.33 gross, the monthly profit from the use of the tax relief is PLN 564, which is PLN 6,768 per year.

Zero PIT - is it worth it?

As you can see, the application of a tax relief to young employees brings financial benefits - the higher the earnings, the greater the profit (provided that we do not exceed the limit amount entitling us to take advantage of this relief).

Zero PIT in the month of the employee turning 26 years of age can be used, provided that the transfer with the remuneration comes from the employer no later than on the day of such birthday.