This article is a part of Poland Unpacked. Weekly intelligence for decision-makers
Interactive chart On October 22, Poland's lower house of parliament, the Sejm, voted on the government's proposed tax reforms, scheduled to take effect in 2027. The first personal income tax threshold would rise from PLN 120,000 to PLN 130,000, while income between PLN 130,000 and PLN 150,000 would be taxed at a new rate of 24%, rather than the current 32%.
According to the Ministry of Finance, around 3.5 million taxpayers would benefit from the changes, with the maximum annual saving reaching PLN 3,600. At the same time, the reform would raise the solidarity levy on high earners from 4% to 5% and restrict access to the lump-sum tax regime by lowering the annual revenue threshold from EUR 2 million to EUR 250,000.
The original proposal also included an increase in corporate income tax (CIT) from 19% to 22% for the largest companies. This was intended to make the reform broadly revenue-neutral, potentially even generating an additional PLN 3–5 billion for public finances between 2027 and 2029.
Two crucial amendments
On Thursday, October 22, the Sejm narrowly approved two significant amendments to the government's income tax reform proposal.
The first, introduced by Ryszard Petru of the Centrum parliamentary group, would automatically adjust personal income tax brackets and the tax-free allowance for inflation each year. It passed with 217 votes in favor and 200 against.
The second amendment, proposed by both Petru and independent MP Janusz Kowalski, removes the planned corporate income tax increase from 19% to 22% for the largest companies. It passed by an even narrower margin, with 220 votes in favor and 214 against.
Regardless of whether these amendments are justified – and I have previously written about the disproportionate tax burden borne by people subject to Poland's progressive income tax scale – their implications for public finances deserve closer examination.
Estimating the fiscal cost
The amendments fundamentally alter the fiscal balance of the reform. Scrapping the planned CIT increase alone means that public sector revenues between 2027 and 2030 would be PLN 32 billion lower than envisaged in the original proposal. The estimated annual revenue losses are shown in the main chart.
Indexing personal income tax brackets and the tax-free allowance to inflation would further reduce revenues. The impact would first be felt in 2028. Under the adopted amendment, the first adjustment would be announced in 2027, based on inflation in 2026, which is likely to be around 3–3.2%.
This would raise the tax-free allowance by approximately PLN 1,000, the first income tax threshold to around PLN 134,000, and the next threshold to roughly PLN 155,000.
Based on my simplified estimates, increasing the tax-free allowance alone would reduce annual revenues by around PLN 2–2.5 billion. Combined with the adjustment of the other tax brackets, total PIT revenues in 2028 could be approximately PLN 4–5 billion lower.
Crucially, these costs would accumulate over time. By 2029, the annual revenue shortfall could reach PLN 8–10 billion, potentially rising to around PLN 20 billion by 2031.
The bigger picture
Together, the two amendments could worsen Poland's general government fiscal balance by approximately PLN 25 billion in 2030 compared with the original reform proposal. That is equivalent to around 0.5% of GDP.
Abandoning the CIT increase would permanently eliminate the additional revenues anticipated by the government. Meanwhile, the cost of inflation-indexing PIT would grow with each successive increase in tax brackets and the tax-free allowance. The fiscal consequences of both amendments would therefore become increasingly significant in the years ahead.
Interactive chart All this comes at a time when Poland's general government deficit reached 7.2% of GDP in 2025 and is projected to stand at 7.1% in 2026. Moreover, Poland will face the need for substantial fiscal tightening in 2029–2030 to comply with domestic and EU fiscal rules.
Lower tax revenues mean that achieving the same fiscal targets would require deeper spending cuts or increases in other taxes.
Next stop: the Senate, then back to the Sejm
The bill now moves to the Senate, which can approve it without changes, propose its own amendments, or reject it entirely. Senators have 30 days to consider the legislation.
Any amendments proposed by the Senate would then return to the Sejm, which can reject them by an absolute majority vote.
The final shape of the reform is therefore far from settled. The narrowly approved amendments concerning corporate income tax and the inflation-indexing of personal income tax thresholds could become the subject of further disputes as the legislation moves through parliament.