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Thursday, May 23, 2024

13th and 14th pension. Will the 13th and 14th pensions be taxed? Deputy family minister Stanisław Szwed answers

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The 13th and 14th pensions are reduced by personal income tax. This significantly reduces the amount that retirees would be supported by. This step is shocking – emphasized Michał Jaros, MP from the Civic Coalition. The parliamentarian sent an interpellation on this matter to the Minister of Family and Social Policy Marlena Maląg. There is a response from the ministry.

Interpellation to the Minister of Family and Social Policy on taxation of the 13th and 14th pension was directed by Michał Jaros from the Civic Coalition. “The economic situation of Polish women and men is getting worse and worse due to the rising prices of basic foodstuffs. A particularly disadvantaged social group are pensioners who experience the effects inflation with redoubled force,” wrote the MP.

Jaros pointed out, “Polish pensioners expect specific solutions that will directly affect their financial situation. Instead, the Council of Ministers decided to tax the benefit of the 13th and 14th pension, which significantly reduces the amount that would be supported by pensioners. current situation,” he added.

Therefore, the parliamentarian asked why it was decided to tax the benefits of the 13th and 14th pensions.

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13th and 14th pensions taxed

Deputy Minister of Family and Social Policy, Stanisław Szwed, noted that the so-called 13. retirement is an annual support system for pensioners. As he reminded, it was paid for the first time in 2019, and from 2020 the payment of this benefit for all beneficiaries has been guaranteed by law. In turn, the so-called The 14th pension – as Szwed added – “is an ad hoc benefit granted to entitled persons on the basis of episodic regulations”. “So far it has been paid twice, i.e. in 2021 and 2022.” – indicated the deputy head of the Ministry of Labor and Social Policy.

According to the Swede, “the construction of the mechanism of additional annual cash benefits for pensioners provides support primarily to people with the lowest income.”

As he informed, from the amount of the 13th and 14th pension, the health insurance contribution and personal income tax are collected. According to the deputy family minister, “the exemption from personal income tax of the 13th and 14th pensions is not systemically justified”.

“As it results from Article 12(1) of the Act on the additional annual cash benefit for old-age and disability pensioners, as well as from the Act on the next additional annual cash benefit for old-age and disability pensioners in 2022 – for the purposes of personal income tax, the additional annual cash is a benefit referred to in Article 12(7) of the PIT Act, i.e. old age/disability pension.The above means that in the light of Article 10(1)(1) in conjunction with Article 12(7) of the PIT Act, 13. and the 14th pension are income that is taxable on general terms according to the tax scale. Only exceptionally, in 2022, these benefits were exempt from personal income tax, “said the deputy head of the Ministry of Labor and Social Policy in response to an interpellation.

Stanisław Szwed informed that “both in the scope of the proposed regulation concerning the payment of the 14th old-age pension and the annual 13th old-age pension, the exemption of the mentioned cash benefits from personal income tax is not taken into account.” The deputy minister informed that “analytical and conceptual work is currently underway to introduce the annual payment of the 14th pension”.

Who does taxation matter to?

The issue of taxation of benefits with personal income tax is important for persons whose basic benefit, together with the 13th and 14th old-age pension, will exceed PLN 2,500 gross. Benefits up to this level, due to the increase in the free amount from January 2022, are in practice exempt from personal income tax.

In the justification to last year’s draft regulation on the abandonment of income tax collection, the Ministry of Finance explained that exceeding this threshold (PLN 2,500) “as a consequence (for this one month) will give rise to the obligation to collect tax advances from the pensioner, despite the fact that the annual income of the taxpayer will not exceed PLN 30,000.

The thirteenth pension is generally paid in April together with the ordinary old-age or disability pension. Pursuant to the regulations, the thirteens 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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