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Wednesday, February 21, 2024

13th and 14th pension. Some people will receive lower 13th and 14th pensions in hand. Deputy Minister of Finance Artur Soboń explains

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The thirteenth and fourteenth pensions – after the exceptional 2022 – are to be reduced by personal income tax this year. The PIT Act does not provide for a “permanent” exemption from tax on the thirteenth and fourteenth pensions – noted the Deputy Minister of Finance Artur Soboń. The deputy head of the Ministry of Finance announced which pensioners can count on the fact that their benefits will not be lower by income tax.

Deputy Minister of Finance, Artur Soboń, in response to an interpellation by Michał Jaros from the Civic Coalition, stated that the 13th and 14th pension is income subject to income tax on general principles according to the tax scale. The exception was 2022, when benefits were not subject to taxation, which allowed to receive a larger benefit in hand. As Soboń explained, the reason was the exceptional situation last year, caused by Russia’s aggression against Ukraine, “and, as a result, a sharp increase in energy priceswhich drove up the prices of other products.

Taxation of thirteenth and fourteenth pensions

The deputy head of the Ministry of Finance made a reservation that “the PIT Act does not provide for a ‘permanent’ tax exemption for the 13th and 14th pension”. As announced, no tax exemption is planned this year. The Deputy Minister of Family and Social Policy, Stanisław Szwed, informed about this earlier.

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Artur Soboń pointed out that the Budget Act for 2023 assumed that 13. retirement will be taxable personal income tax and was the basis of the health insurance premium. In turn, “regarding the payment of the benefit in 2023, there are currently no regulations on the basis of which this benefit would be paid” – noted the deputy finance minister.

As Soboń noted, under the tax conditions applicable from 2022, a person who receives only an old-age or disability pension in the amount of up to PLN 2,500 (gross) does not pay income tax on average monthly. It’s a consequence of growth tax-free amount up to 30 thousand zloty.

The need to pay an advance tax occurs when the basic benefit together with the payment of the 13th or 14th old-age pension exceeds PLN 2,500 gross. Ministry of Finance in the justification to last year’s draft regulation on the abandonment of income tax collection, it explained that exceeding the threshold of PLN 2,500 gross “as a consequence (for this one month) will give rise to the obligation to collect an advance tax from the pensioner, despite the fact that the taxpayer’s annual income will not exceed PLN 30,000 . zloty”.

“For comparison, a person receiving only the minimum pension of PLN 1,588.44 (from March 2023) and additionally receiving the 13th and 14th pension would pay approx. PLN 1,486 in the 2021 system in PIT, which would reduce net benefit by this amount” – said Artur Soboń.

At the same time – as the deputy head of the Ministry of Finance pointed out – “the basic task performed within the insurance system, affecting the amount of pension and disability benefits, is their valorisation, not tax solutions that depend on the individual situation of the taxpayer”.

13th and 14th pensions – health insurance contributions

The health insurance contribution is also collected from the amount of the 13th and 14th old-age pensions. In response to the question, the Deputy Minister cited data from the National Health Fund Headquarters, which show that the estimated revenues of the National Health Fund from the health insurance contribution for the 13th and 14th pension for 2022 amounted to:

– 13’s – 1,044,089.15 thousand. PLN (approx. 8,912,712 titles),

– 14’s – 559,665.36 thousand. zloty,

– 13’s – 103,131.94 thousand PLN (approx. 1,009,061 titles),

– 14’s – 83,461.04 thousand zloty.

“Taking into account the amount of the 13th pension in 2022 (PLN 1,338.44) and planned for 2023 (PLN 1,588.44), the dynamics of the health insurance contribution base estimated for 2023 for the 13th old-age pension will amount to approx. 18.7 percent Considering the above, the estimated increase in NHF revenues from health insurance contributions from the age of 13 in 2023 compared to 2022 may amount to about PLN 214,283 thousand, of which about PLN 195,020 thousand from ZUS PLN and about PLN 19,263,000 from KRUS” – we read in response to the question.

Soboń noted that due to the complexity of the criteria for the so-called fourteen-year-olds, the National Health Fund and the Ministry of Health do not have sufficient data to estimate the possible increase in the National Health Fund’s revenue from health insurance contributions from the 14th retirement.

13th and 14th pension – when is the payment?

The thirteenth pension is generally paid in April together with the ordinary old-age or disability pension. Pursuant to the regulations, the “thirteen” are paid – regardless of the amount of the main benefit – in the amount of the lowest old-age pension applicable from 1 March of the year in which the additional benefit is paid.

From March 1, 2023, the lowest pension increased from PLN 1,388.44 gross (PLN 1,218 net) to PLN 1,588.44 gross (PLN 1,445 net).

In turn, the fourteenth pension in 2022 was paid in August and September. The benefit was paid in the amount of the lowest old-age pension (then PLN 1,338.44 gross). An allowance in this amount was granted to persons whose basic benefit does not exceed PLN 2,900 gross.

In the case of persons with a benefit in the amount between PLN 2,900 and PLN 4,188.4414, the old-age pension was reduced in accordance with the “one zloty for one zloty” principle. The minimum amount of the fourteenth old-age pension entitling to receive the benefit was PLN 50.

Main photo source: Shutterstock

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