How to Calculate Net Salary in Poland for Employees

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August 15, 2024

Calculating net salary in Poland involves understanding the country’s tax system, which varies depending on factors such as age, tax deductions, and social security contributions. This article provides a step-by-step guide to calculating the net salary for an individual earning 7,000 PLN gross per month, with specific considerations for those under and over 26 years of age.

1. Understanding Poland’s Tax System

Poland operates a progressive tax system, where income tax rates increase with higher earnings.

The income tax brackets have been updated, and currently:

12% for income up to 120,000 PLN annually.
32% for income exceeding 120,000 PLN annually.

A significant aspect of Poland’s tax system is the “Young Tax Relief” (Ulga dla Młodych), which exempts individuals under 26 years old from paying income tax on earnings up to 85,528 PLN per year.

Regardless of age, all employees must contribute to social security, which includes pension, disability, and health insurance. These contributions are deducted from the gross salary before calculating the net salary.

2. Social Security Contributions

Social security contributions in Poland are deducted from the gross salary for all employees as follows:

Pension (Emerytalne): 9.76% of gross salary
Disability Insurance (Rentowe): 1.5% of gross salary
Sickness Insurance (Chorobowe): 2.45% of gross salary
Health Insurance (Ubezpieczenie zdrowotne): 9% of gross salary, calculated on the basis of the gross salary minus the pension, disability, and sickness contributions.

These contributions are standard across all age groups.

A. Net Salary Calculation for Employees Over 26 Years Old

Here’s how you calculate the net salary for an individual over 26 years old with a gross salary of 7,000 PLN:

Gross Salary: 7,000 PLN
Pension Contribution (9.76%): 7,000 PLN * 9.76% = 683.20 PLN
Disability Contribution (1.5%): 7,000 PLN * 1.5% = 105 PLN
Sickness Contribution (2.45%): 7,000 PLN * 2.45% = 171.50 PLN
Subtotal for Health Insurance Basis: 7,000 PLN – (683.20 PLN + 105 PLN + 171.50 PLN) = 6,040.30 PLN
Health Insurance Contribution (9%): 6,040.30 PLN * 9% = 543.63 PLN
Taxable Income: 7,000 PLN – (683.20 PLN + 105 PLN + 171.50 PLN + 250 PLN* standard tax deductible cost) = 5,790.30 PLN
Income Tax (12%): 5,790.30 PLN * 12% = 694.84 PLN
Income Tax After Health Insurance Deduction: 694.84 PLN – 300 PLN (fixed amount deductible from tax) = 394.84 PLN
Net Salary: 7,000 PLN – (683.20 PLN + 105 PLN + 171.50 PLN + 543.63 PLN + 394.84 PLN) = 5,101.83 PLN

B. Net Salary Calculation for Employees Under 26 Years Old

For employees under 26 years old, the income tax is exempt, making the net salary higher:

Gross Salary: 7,000 PLN
Pension Contribution (9.76%): 7,000 PLN * 9.76% = 683.20 PLN
Disability Contribution (1.5%): 7,000 PLN * 1.5% = 105 PLN
Sickness Contribution (2.45%): 7,000 PLN * 2.45% = 171.50 PLN
Subtotal for Health Insurance Basis: 7,000 PLN – (683.20 PLN + 105 PLN + 171.50 PLN) = 6,040.30 PLN
Health Insurance Contribution (9%): 6,040.30 PLN * 9% = 543.63 PLN
Income Tax: Exempt under the Young Tax Relief.
Net Salary: 7,000 PLN – (683.20 PLN + 105 PLN + 171.50 PLN + 543.63 PLN) = 5,496.67 PLN

Conclusion

For an employee earning 7,000 PLN gross per month in Poland, the net salary differs significantly depending on age. For those over 26 years old, the net salary is approximately 5,101.83 PLN, while those under 26 benefit from tax exemptions and receive about 5,496.67 PLN. Understanding these calculations is crucial for both employers and employees, as it highlights the impact of age-related tax benefits and social security contributions on take-home pay(Net Salary).