Poland's President Nawrocki Signs Bill for Income Tax Exemption for Families with Two or More Children

President Nawrocki Champions Family Tax Relief

Poland's President Karol Nawrocki, who assumed office on August 6, 2025, has signed a draft bill introducing a zero personal income tax (PIT) for families raising at least two children. The signing took place on August 8, 2025, in Kolbuszowa, fulfilling a central promise from his presidential campaign, dubbed the 'Contract with the Poles'. This initiative is designed to support families, increase household income, stimulate the economy, and address the country's critically low birth rate.

Details of the Proposed Legislation

The new legislation aims to exempt parents, legal guardians, and foster parents from income tax, provided they have legal responsibility for at least two children. This includes minors, adult children receiving care allowance or social pension, and students up to the age of 25. The exemption applies to families with an annual income of up to 140,000 zloty, which is approximately €32,973 or $38,395-$38,471.

According to estimates from the presidency, an average Polish family is projected to save around 1,000 zloty (approximately €235 or $274) per month as a result of this tax relief. The measure is part of a broader 'tax armor' package that also includes:

• A reduction in VAT from 23% to 22%.
• The abolition of capital gains tax.
• The introduction of quota-based pension indexation.

Addressing Poland's Demographic Challenge

The policy comes as Poland faces a severe demographic crisis. In 2024, the country's fertility rate plummeted to a new postwar low of 1.099, significantly below the 2.1 replacement rate needed to maintain population levels. The population also saw a decline of approximately 147,000 in 2024. President Nawrocki has emphasized that the personal income tax exemption is not only a promise but an 'obligation to the continued existence of Poland and the independence of the Polish state'.

Legislative Path and Future Impact

While President Nawrocki signed the draft bill in August, the legislation is not yet fully enacted. It requires approval from both the Parliament (Sejm) and the Senate to become law. The full financial impact of these new regulations is expected to be reflected in the 2026 tax returns, which will be filed in 2027. Experts have noted that while the reform aims to benefit families, wealthier households may experience greater gains compared to low-income families who already pay minimal or no income tax.