Zero Tax for Families: Poland’s Plan to Strengthen Its Future

Poland’s Prime Minister Donald Tusk

Poland has taken a bold step towards strengthening family support and addressing population decline by introducing a zero personal income tax (PIT) for parents raising two of more children.

Under the new law, families earning up to 140,000 zloty (€32,973) per year will no longer pay income tax. This aims to increase household income, stimulate economic activity, and encourage higher birth rates.

The policy reflects a broader theme shaping global policy: how governments can use taxation, incentives, and infrastructure investment to address long-term demographic and workforce challenges.

Who is Eligible and How it Works

Under the new law, the zero-tax rate applies to:

• Parents with at least two dependent children

• Legal guardians, provided the child lives with them

• Foster parents

• Adults supporting children under 25 who are still studying, or individuals receiving a care allowance or social pension

Children who are married or in full-time care facilities are not included when calculating eligibility.

The reform also raises the joint tax threshold for spouses to 140,000 zloty, making it easier for families to remain under the tax-free limit.

What Families Can Expect to Save

The average family will have around 1,000 zloty (€235) in additional income per month, boosting household budgets and consumption.

Benefits will vary based on income level, with lower-income families seeing benefits of around 75 zloty (€17) per month.

The changes will take effect in 2026 tax returns (filed in 2027), as part of a wider “Tax Armour” reform package that also includes a reduction of VAT to 22%, the abolition of capital gains tax, and quota-based pension indexation.

Why This Matters Beyond Tax Policy

Poland is facing a shrinking working-age population and record-low birth rates. Last year, only 252,000 babies were born, the lowest number since World War II.

For sectors like engineering, construction, and infrastructure delivery, this policy has indirect but meaningful implications:

• Higher disposable incomes could drive growth in residential construction, utilities demand, and local infrastructure investment.

• Government-led tax and pension reforms may influence future capital allocation and public spending priorities, areas that shape infrastructure delivery pipelines.

A Global Conversation

As nations compete for skilled workers and grapple with changing demographics, Poland’s approach may be watched closely by other countries, particularly Australia, where labour shortages are front of mind.

Poland’s new family tax reform may look like a household benefit, but it’s also a signal that human capital is becoming central to long-term infrastructure and economic strategy.