Tax scale, flat tax or lump sum – choosing a form of taxation with the health contribution

When choosing a form of taxation, an entrepreneur usually compares the rates: 12% for the lump-sum tax on registered revenue (ryczałt od przychodów ewidencjonowanych), 19% for the flat tax, and 12% and 32% for the tax scale. This comparison is misleading, because each form has a different base, a different health contribution and different rules for deducting it. Taking IT services as an example, we calculate the total burden at three levels of revenue and show when the result is reversed. We also discuss the exclusions, the deadlines for changing the form of taxation and the bills for 2027.

Three forms – three tax bases and three health contributions

The tax scale and the flat tax are levied on income, the lump-sum tax on revenue with no deduction for costs, and each of these forms calculates and deducts the health contribution differently.

The tax scale applies by operation of law unless you choose the lump-sum tax or the flat tax (Article 9a(1) and (2) of the PIT Act (ustawa o PIT)). In 2026 the tax under the tax scale is 12% of income minus PLN 3,600, and above PLN 120,000 it is PLN 10,800 plus 32% of the excess (Article 27(1)). The flat tax is 19% (Article 30c(1)). The lump-sum tax on services related to software is 12% of revenue, without deducting costs (Article 12(1)(2b)(b) and (2) of the Lump-Sum Income Tax Act (ustawa o ryczałcie)).

The health contribution is 9% of income under the tax scale and 4.9% under the flat tax, and from February 2026 not less than PLN 432.54 a month. Under the lump-sum tax it is a fixed amount: PLN 498.35, PLN 830.58 or PLN 1,495.04, depending on revenue. Under the tax scale it reduces neither income nor tax. The Director of the National Revenue Information Service (Dyrektor Krajowej Informacji Skarbowej, the Director of the KIS) captured this in an individual tax ruling of 21 May 2025, no. 0114-KDWP.4011.28.2025.2.IG. Since 2022, as the Director of the KIS stated, “only taxpayers carrying on business activity who pay health contributions in connection with carrying on an activity whose income/revenue is taxed under the flat tax, the lump-sum tax on registered revenue or the tax card may reduce […] income/revenue/tax […] by part of the contributions paid” (translation by the author). We leave the tax card (karta podatkowa) out of the comparison.

So compare the annual sum of the tax and the health contribution, not the rates alone.

Forms of taxation of business activity in 2026 – tax base, rate and health contribution

Contributions – the same amount, a different effect on the tax base

You pay full contributions in the same amount under every form, but they reduce the tax base to a different extent.

In 2026 full contributions amount to PLN 1,926.76 a month: PLN 1,788.29 for social insurance and PLN 138.47 for the Labour Fund and the Solidarity Fund (Fundusz Pracy i Fundusz Solidarnościowy, FP and FS). Annually this is PLN 21,459.48 and PLN 1,661.64, PLN 23,121.12 in total. You deduct social security contributions from income under the tax scale and the flat tax (Article 26(1)(2)(a) and Article 30c(2)(1) of the PIT Act). Under the lump-sum tax you deduct them from revenue (Article 11(1) of the Lump-Sum Income Tax Act). That provision does not cover FP and FS contributions, so they do not reduce a lump-sum taxpayer’s tax. Under the tax scale and the flat tax, our example treats them as a business cost (Article 22(1) of the PIT Act). Without this, the burden will rise by PLN 316–681, with no change in the order of the forms in the table.

Under the lump-sum tax, revenue “may be reduced by 50% of the health insurance contributions paid in the tax year” in respect of business activity taxed under the lump-sum tax, provided that they have not been refunded (Article 11(1a) of the Lump-Sum Income Tax Act). In a ruling of 17 October 2025, no. 0113-KDIPT2-1.4011.645.2025.1.DJD, the Director of the KIS added: “The deduction may not exceed 50% of the amount of health insurance contributions paid.” In the ruling of 21 May 2025, on the other hand, the Director of the KIS ruled out such a deduction from revenue from private letting.

The thresholds of PLN 60,000 and PLN 300,000 are calculated on revenue from the beginning of the year, reduced by social security contributions (Article 81(2f) and (2g) of the Health Care Services Act). With full contributions paid during the year, the highest amount will therefore apply to annual revenue above PLN 300,000 + PLN 21,459.48 = PLN 321,459.48. It will raise the annual contribution from PLN 830.58 × 12 = PLN 9,966.96 to PLN 1,495.04 × 12 = PLN 17,940.48, i.e., by PLN 7,973.52. After deducting half, the increase in the burden is PLN 7,973.52 − 12% × PLN 3,986.76 = PLN 7,495.11.

You deduct the contribution paid in the tax year, so you deduct an additional payment settled after the end of the year in the year in which you pay it. Monitor your cumulative revenue, especially in the last quarter.

Calculation for IT services: PLN 150,000, 300,000 and 600,000

With costs equal to 20% of revenue, the tax scale gives the lowest total burden at PLN 150,000, and the lump-sum tax at PLN 300,000 and PLN 600,000.

Hypothetical example: a programmer provides services related to software, has costs equal to 20% of revenue, pays full contributions throughout 2026 and has no other income or reliefs. According to the guide published by the Social Insurance Institution (Zakład Ubezpieczeń Społecznych, ZUS), income for the purposes of the health contribution is reduced by social security contributions not treated as tax-deductible costs. The annual base may not be lower than the product of the number of months and the minimum wage, so the minimum annual contribution under the tax scale and the flat tax is 12 × PLN 432.54 = PLN 5,190.48. We deduct the contribution under the flat tax in the tax return, and we do not round amounts to whole zlotys.

At revenue of PLN 150,000, the base under the tax scale is PLN 150,000 − PLN 30,000 − PLN 1,661.64 − PLN 21,459.48 = PLN 96,878.88. Tax: PLN 96,878.88 × 12% − PLN 3,600 = PLN 8,025.47; contribution: PLN 96,878.88 × 9% = PLN 8,719.10. Under the flat tax, the contribution of PLN 96,878.88 × 4.9% = PLN 4,747.07 is below the minimum, so it amounts to PLN 5,190.48. Tax: (PLN 96,878.88 − PLN 5,190.48) × 19% = PLN 17,420.80. Under the lump-sum tax, the contribution is PLN 9,966.96, and the tax: (PLN 150,000 − PLN 21,459.48 − PLN 4,983.48) × 12% = PLN 14,826.84.

At PLN 600,000, the contribution under the flat tax is PLN 456,878.88 × 4.9% = PLN 22,387.07, but you will deduct only PLN 14,100. Under the lump-sum tax, revenue after contributions, PLN 578,540.52, exceeds the threshold, so the contribution is PLN 17,940.48 and the deduction PLN 8,970.24.

Total burden in 2026 – hypothetical example (IT services, costs of 20% of revenue, full contributions)

Add PLN 23,121.12 of contributions to each amount in the last column – they are the same under all forms. The model assumes full deductions, although according to the ruling of 15 June 2026, no. 0112-KDIL2-2.4011.446.2026.2.MG, this is an entitlement: “The taxpayer may exercise this right but is not obliged to make the deduction.” Repeat the calculation with your own figures in the Tax and contribution calculator 2026 or in the Advanced tax and contribution calculator 2026.

When the result is reversed

The order of the forms is determined above all by the share of costs that you document.

In our model, at PLN 150,000 the tax scale beats the lump-sum tax even with no costs other than the FP and FS contributions: PLN 13,001.24 of tax + PLN 11,419.10 of contribution = PLN 24,420.34, against PLN 24,793.80. The flat tax overtakes the lump-sum tax with costs above approx. 13% of revenue (PLN 150,000), approx. 30% (PLN 300,000) and approx. 34% (PLN 600,000). The tax scale and the flat tax break even at income of approx. PLN 153,000, not at the PLN 120,000 threshold. Above PLN 287,755.10 of income (PLN 14,100 : 4.9%), the excess contribution under the flat tax no longer reduces the tax.

Solutions available only under the tax scale shift the result. Joint taxation with a spouse is excluded under the flat tax and the lump-sum tax on business activity (Article 6(8) of the PIT Act). Child relief – as the Director of the KIS stated in the ruling of 15 June 2026 – “is available to taxpayers settling income tax under the general rules referred to in Article 27 of that Act”.

The authority may challenge the costs on which you base the advantage of the tax scale or the flat tax. In a ruling of 10 October 2025, no. 0112-KDIL2-2.4011.680.2025.2.MM, it refused to treat as tax-deductible costs, among other things, curtains and a desk lamp that the taxpayer was to use both in the business and privately. It cited the judgment of the Supreme Administrative Court (Naczelny Sąd Administracyjny, NSA) of 16 October 2012, case ref. II FSK 430/11: only an expense that has or may have an effect on generating or increasing revenue is a cost. So calculate the forms on documented costs and, where costs are close to the threshold, in two variants. A company requires a separate calculation – see Converting a sole trader into a sp. z o.o. — what actually happens to the tax position.

A former or current employer – two different exclusions

Services for a former or current employer rule out the flat tax only in the case of activities under employment performed in the tax year, and the lump-sum tax also in the case of activities from the previous year.

Article 9a(3) of the PIT Act covers services corresponding to activities that the taxpayer “performed or performs in the tax year” under employment; point 1 of that provision has been repealed. The taxpayer then loses the flat tax for the whole year and pays advances under the tax scale from the beginning of the year, with default interest. Article 8(2) of the Lump-Sum Income Tax Act also covers activities performed “in the year preceding the tax year”. From the day of such revenue until the end of the year, a lump-sum taxpayer pays tax under the general rules.

The identity of the activities is decisive. In a ruling of 25 April 2025, no. 0113-KDIPT2-1.4011.194.2025.2.MGR, an IT specialist, after leaving employment, provided services to a different business line of the same company. The authority found the scopes to be different and held that “partial overlap is not equivalent to identity”. The case of a physiotherapist working for her current employer was decided in the same way under Article 8(2) (ruling of 23 January 2025, no. 0114-KDIP3-1.4011.959.2024.1.AK).

The authority does, however, shift the burden of proof. In a ruling of 16 April 2025, no. 0115-KDIT3.4011.217.2025.2.RS, it stated that since the flat tax is in the taxpayer’s interest, “the obligation rests with the taxpayer to demonstrate that he or she does not meet the conditions arising from Article 9a(3)”. This does not change the criterion, but it determines the documents you need: keep the scope of your duties under the employment contract and the description of services in the contract.

If you end your employment in 2026 and in 2027 perform the same activities for that employer within your business, the flat tax will be available, but the lump-sum tax will not.

Deadline for choosing and changing the form of taxation

You choose or change the form of taxation by the 20th day of the month following the month of your first revenue in the year, and the choice also applies in subsequent years.

Where your first revenue is earned in December, the deadline expires at the end of the year (Article 9a(2) of the PIT Act). By the same deadline you give notice of withdrawal or choose another form; otherwise the choice applies to the following years (Article 9a(2a) and (2b) of the PIT Act, Article 9(1)–(1b) of the Lump-Sum Income Tax Act). Under Article 9a(2c) of the PIT Act and Article 9(1c) of the Lump-Sum Income Tax Act, you can also file the statements via the Central Register and Information on Economic Activity (Centralna Ewidencja i Informacja o Działalności Gospodarczej, CEIDG). The tax scale therefore applies without a statement only if you have not previously chosen another form or have validly withdrawn from it.

The authority applies the deadline strictly. In a ruling of 27 April 2026, no. 0114-KDWP.4011.76.2026.2.IG, an entrepreneur with the flat tax recorded in CEIDG had been paying advances under the tax scale since 2022. In 2023–2026, however, the entrepreneur did not pay the first advance on time, so the authority held the change to be ineffective: “filing the relevant statement, within the deadline laid down in the provisions, is a necessary condition for being able to withdraw from taxation in the form of the so-called flat tax and switch to the general rules”. At the same time, it accepted that a payment made on time with an unambiguous transfer reference may replace the statement. With regard to a lump-sum taxpayer, the authority reiterated in a ruling of 7 July 2025, no. 0115-KDIT3.4011.436.2025.1.RS, that the taxpayer “– as a rule – is obliged to file a written statement electing the method of taxation within the specified statutory deadline”.

If you earn your first revenue of 2027 in January, file the statement by 20 February 2027 and keep the confirmation.

The year 2027 – bills, not law

For 2027 the Government has adopted amending bills, but until the acts are passed and promulgated, the provisions described above apply.

On 22 September 2026 the Council of Ministers (Rada Ministrów) adopted a bill amending the PIT, CIT and Lump-Sum Income Tax Acts (ustawy o PIT, CIT i ryczałcie). According to the announcement of the Ministry of Finance (Ministerstwo Finansów), the letting of intellectual property between related entities is to be subject to a 17% rate. The letting and usufructuary lease (dzierżawa) of other assets to such entities are to be subject to a 15% rate on the excess of revenue over PLN 100,000. The announcement does not mention other services to related entities. The planned entry into force is 1 January 2027.

On 29 September 2026 the Council of Ministers adopted a bill which, according to press reports, provides for a change to the tax scale (first threshold of PLN 130,000, a new rate of 24%) and a restriction on the lump-sum tax; the Government had announced a limit of EUR 250,000. Until the act is passed and promulgated, the limit in Article 6(4) of the Lump-Sum Income Tax Act applies: revenue for the previous year of up to EUR 2,000,000, which in 2026 amounts to PLN 8,517,200.

Do not change the form of taxation on the basis of bills. The deadline for choosing for 2027 will expire on 20 February 2027 at the earliest, so you will decide knowing the provisions in force from 1 January 2027.

The most common mistake

The most common mistake is choosing the form of taxation on the basis of the rate alone – in the belief that the 12% lump-sum tax must be cheaper than the 19% flat tax.

In our example, at revenue of PLN 150,000 the lump-sum tax costs PLN 24,793.80, the flat tax PLN 22,611.28 and the tax scale PLN 16,744.57. The lump-sum tax therefore means PLN 24,793.80 − PLN 16,744.57 = PLN 8,049.23 more than the tax scale. It is levied on revenue, and its health contribution does not fall as income falls. The mirror-image mistake is made by someone who chooses the flat tax at PLN 600,000 and overlooks the limit: of the PLN 22,387.07 contribution, only PLN 14,100 will be deducted.

Before the deadline for choosing, calculate the tax and the health contribution under all forms on the basis of your planned revenue and documented costs. Take into account the minimum contribution, the PLN 14,100 limit and the lump-sum tax thresholds, and repeat the calculation whenever your revenue changes significantly.

Summary

1. Compare the forms by the annual sum of the tax and the health contribution after deductions, not by the rates.
2. Calculate the lump-sum tax base from revenue reduced by social security contributions and by 50% of the health contribution paid.
3. Base the calculation on costs that you document – in our model the flat tax overtakes the lump-sum tax with costs above approx. 13–34% of revenue, depending on its level.
4. Compare the scope of activities in writing before moving from employment to a contract with the same employer – under the lump-sum tax, also for the previous year.
5. File the statement electing the form of taxation or the statement of withdrawal by the 20th day of the month after the month of your first revenue. Do not change the form of taxation for 2027 on the basis of bills.

Sources cited

All quotations from Polish-language sources — statutes, tax rulings and court judgments — are given here in the author's translation; the Polish wording is authoritative.

• Individual tax ruling of the Director of the National Revenue Information Service of 21 May 2025, no. 0114-KDWP.4011.28.2025.2.IG – since 2022 only taxpayers under the flat tax, the lump-sum tax and the tax card partially deduct the health contribution; under the lump-sum tax, the deduction under Article 11(1a) of the Lump-Sum Income Tax Act is available only from revenue from business activity, not from revenue from private letting. https://eureka.mf.gov.pl/informacje/podglad/640646
• Individual tax ruling of the Director of the National Revenue Information Service of 17 October 2025, no. 0113-KDIPT2-1.4011.645.2025.1.DJD – a lump-sum taxpayer deducts from revenue all social security contributions paid (Article 11(1)) and 50% of the health contributions paid (Article 11(1a) of the Lump-Sum Income Tax Act). https://eureka.mf.gov.pl/informacje/podglad/663347
• Individual tax ruling of the Director of the National Revenue Information Service of 15 June 2026, no. 0112-KDIL2-2.4011.446.2026.2.MG – the deduction of contributions in the PIT-36L return as the taxpayer’s entitlement, the PLN 14,100 limit under Article 30c(2)(2) of the PIT Act, and child relief only for taxation under the tax scale. https://eureka.mf.gov.pl/informacje/podglad/696495
• Individual tax ruling of the Director of the National Revenue Information Service of 10 October 2025, no. 0112-KDIL2-2.4011.680.2025.2.MM – refusal to treat as tax-deductible costs expenses on furnishings used both in the business and privately; the possibility of switching from the flat tax to the lump-sum tax from 2026 after filing a statement. https://eureka.mf.gov.pl/informacje/podglad/662265
• Judgment of the Supreme Administrative Court of 16 October 2012, case ref. II FSK 430/11 – not every expense connected with the business is a tax-deductible cost, only one that is causally linked to revenue, i.e., one that has or may have an effect on its generation or increase; the proposition in the wording cited in ruling no. 0112-KDIL2-2.4011.680.2025.2.MM.
• Individual tax ruling of the Director of the National Revenue Information Service of 25 April 2025, no. 0113-KDIPT2-1.4011.194.2025.2.MGR – IT services for a former employer that differ in scope from the work under employment do not exclude the flat tax; partial overlap of activities is not identity within the meaning of Article 9a(3) of the PIT Act. https://eureka.mf.gov.pl/informacje/podglad/636587
• Individual tax ruling of the Director of the National Revenue Information Service of 16 April 2025, no. 0115-KDIT3.4011.217.2025.2.RS – a doctor providing services to a former employer retains the flat tax where the activities are not identical; the burden of demonstrating that the conditions of Article 9a(3) are not met rests with the taxpayer. https://eureka.mf.gov.pl/informacje/podglad/635364
• Individual tax ruling of the Director of the National Revenue Information Service of 23 January 2025, no. 0114-KDIP3-1.4011.959.2024.1.AK – services for a current employer that are not identical to the activities under the employment contract do not exclude the lump-sum tax under Article 8(2) of the Lump-Sum Income Tax Act. https://eureka.mf.gov.pl/informacje/podglad/624264
• Individual tax ruling of the Director of the National Revenue Information Service of 27 April 2026, no. 0114-KDWP.4011.76.2026.2.IG – withdrawal from the flat tax requires a statement filed within the deadline under Article 9a(2) of the PIT Act; payments of advances under the tax scale made after the deadline do not change the form of taxation. https://eureka.mf.gov.pl/informacje/podglad/688691
• Individual tax ruling of the Director of the National Revenue Information Service of 7 July 2025, no. 0115-KDIT3.4011.436.2025.1.RS – continuation of the choice of the lump-sum tax in subsequent years and the obligation to file a statement of withdrawal within the statutory deadline (Article 9(1)–(1c) of the Lump-Sum Income Tax Act). https://eureka.mf.gov.pl/informacje/podglad/648378
• Ministry of Finance, announcement of 22 September 2026 “The Government has approved a bill that will reduce interpretative doubts and make tax settlements easier” (Rząd zaakceptował projekt, który ograniczy wątpliwości interpretacyjne i ułatwi rozliczenia podatkowe) – the scope of the bill adopted by the Council of Ministers, including the lump-sum tax rates on letting and usufructuary lease to related entities, and the planned date of entry into force. https://www.gov.pl/web/finanse/rzad-zaakceptowal-projekt-ktory-ograniczy-watpliwosci-interpretacyjne-i-ulatwi-rozliczenia-podatkowe
• Social Insurance Institution, “Polish Deal. What is changing in the rules on settling the health insurance contribution from 1 January 2022” (Polski Ład. Co zmienia się w przepisach dotyczących rozliczania składki na ubezpieczenie zdrowotne od 1 stycznia 2022 r.), law as at 1 January 2025 – reduction of income by social security contributions when determining the health contribution base, and the minimum annual base. https://www.zus.pl/documents/10182/3996913/Polski+%C5%81ad+-+poradnik.pdf/f4f5043f-4487-2e82-e93a-8f8d7cc6c5f9

Related materials

• ZUS and health contributions of entrepreneurs and shareholders – who pays and on what base
• The legal form of a business in 2026 – what to actually compare before choosing
• Tax and contribution calculator 2026 – the tax scale, the flat tax and the lump-sum tax
• Advanced tax and contribution calculator 2026 – full settlement of a business

Legal basis: Act of 26 July 1991 on personal income tax (consolidated text: Dz.U. z 2026 r. poz. 592, as amended): Article 6(8), Article 9a(1), (2), (2a)–(2c) and (3), Article 22(1), Article 26(1)(2)(a), Article 27(1), Article 27f, Article 30c(1) and (2); Act of 20 November 1998 on lump-sum income tax on certain revenue earned by natural persons (consolidated text: Dz.U. z 2025 r. poz. 843, as amended): Article 6(4), Article 8(2), Article 9(1)–(1c), Article 11(1) and (1a), Article 12(1)(2b)(b) and (2); Act of 27 August 2004 on health care services financed from public funds (consolidated text: Dz.U. z 2025 r. poz. 1461): Article 79(1), Article 81(2e), (2f) and (2g).