- The youth tax relief exempts people up to 26 years of age from income tax, which translates into a higher net salary.
- The limit of tax-exempt income is PLN 85,528 per year, and exceeding it results in the calculation of tax according to general rules.
- The preferential treatment applies to employment contracts, contracts of service, graduate internships and student internships, among others.
- To take advantage of the relief, it is sufficient to submit a declaration to the employer, thanks to which he does not deduct income tax advances.
Young people starting out in their careers are often looking for ways to increase their income. One of the facilities that makes this possible is the Youth Tax Credit, which is an income tax exemption for those under 26. Such an arrangement is a guarantee of a higher salary, making it easier to get started in adult life. In this article, we explain who can benefit from the youth relief and what conditions need to be met.
What is the relief up to the age of 26?
The relief for the young, or the exemption until age 26, is a tax preference that allows young people to earn more without paying income tax. The mechanism is designed to support those starting their careers, increase their motivation to work and reduce the informal economy.
The relief is effective from 1 August 2019 and applies to income from an employment contract, a contract of mandate, as well as student internships and graduate traineeships. However, age is a condition – those who have not yet reached their 26th birthday can benefit from the preference.
How does the tax for young people work?
The exemption up to the age of 26 means that income earned by young people is not subject to income tax, provided that their annual salary does not exceed the limit of PLN 85,528. If earnings are higher, the excess is subject to tax under the general rules.
In other words, a young worker can earn up to this amount without paying tax, which makes more money on hand. However, despite the tax exemption, he still has to pay social and health insurance contributions.
Who can benefit from the youth relief?
The relief up to the age of 26 covers those employed under:
- employment contract,
- a contract of mandate,
- employment relationship,
- contract of employment, contract of mandate, contract of service, contract of employment,
- graduate traineeship,
- traineeship.
However, it does not cover contracts for specific work or business activities. It is also important to note that the exemption ceases to apply in the month in which the taxpayer turns 26 – from the following month, the income is already subject to the standard taxation rules.
What are the benefits of the youth relief?
- Higher net pay – the absence of income tax means that the employee keeps more money.
- Easier start in the labour market – companies are more likely to hire young people because the cost of employing them is more predictable.
- Encouragement to take up legal work – the lower tax burden reduces the scale of employment in the shadow economy.
Jobs for young people – job offers at Foodcom S.A.
Companies are increasingly offering attractive employment conditions to young people. Foodcom S.A. is a rapidly growing company in the international trade sector that particularly cares about young employees. It provides them with the opportunity to gain valuable work experience and develop their skills in an international environment. Thanks to numerous training and development programmes, young people can advance and build their careers in a stable and promising industry.
Job offers at Foodcom S.A. are aimed at people who want to gain experience in the international trade sector. The company provides the opportunity to work in a global environment, professional development and attractive remuneration.
How do I benefit from the youth allowance?
In order to benefit from the relief, the employee does not need to submit any application – it is enough to inform the employer of the exemption. This can be done by submitting an appropriate declaration so that the employer will not deduct advance income tax payments.
Obtaining the income covered by the relief does not always require the filing of a tax return (PIT-36 or PIT-37). Such an obligation arises when the taxpayer additionally obtains income subject to the tax scale, applies for a refund of overpaid tax or has to add previously deducted amounts.
If a return is filed, the income covered by the allowance should be included in it, mainly in order to correctly account for deductible costs, social and health insurance contributions and the child allowance. On the other hand, if the young worker does not make such a declaration, tax will be charged but can be recovered when the annual tax return is filed.
How does the young person’s allowance affect other tax preferences?
The use of the young person’s allowance can affect other aspects of tax returns, including deductible costs, national insurance and health contributions and child tax credit.
Deductible costs
Costs associated with an employment or contract of mandate can only be deducted in the taxable portion. The total sum of deductible costs according to the 50% standard and the deductible income cannot exceed PLN 85 528 per year.
Social and health insurance contributions
If a taxpayer pays social and health insurance contributions on income covered by the relief, they cannot be deducted from income or tax.
Child relief
Although social security and health contributions are not deductible, they are taken into account when calculating the so-called additional return of the child tax credit. This means that if the taxpayer had no other taxable income, he or she can still benefit from this relief by getting a refund up to the amount of the contributions paid.
In this way, young beneficiaries of the tax exemption can still benefit from tax preferences, such as the child tax credit, despite not having to pay income tax.
Young persons’ relief – a way to higher earnings and a better start in your career!
The Young Tax Credit up to the age of 26 is a solution that significantly supports young people entering the labour market. They can earn more while avoiding income tax up to a certain limit.
If you are looking for employment, check out the job offers at Foodcom S.A., which offers the opportunity to gain experience and develop in a modern company. Taking advantage of the Youth Tax Credit is a great way to increase your earnings and get a better start in your career.
