Choosing the right form of taxation is one of the key decisions for business owners. Both flat and scaled taxation have their advantages and limitations. Which option proves more advantageous depends primarily on the amount and nature of income earned, as well as the entrepreneur's family situation.
Tax scale – when is it worth it?
Tax settlement according to the tax scale may be attractive especially for people who:
- are just starting their business,
- they receive irregular income,
- want to take advantage of tax breaks, e.g. for children,
- are planning a joint settlement with their spouse.
Under this form of taxation, entrepreneurs benefit from a tax-free allowance of PLN 30,000. The rates are 12% for income up to PLN 120,000 per year, and 32% above that threshold. Additionally, there's a 9% health insurance contribution.
The tax scale is therefore a solution that will work in many cases for lower incomes, especially when the taxpayer wants to take advantage of available reliefs and preferences.
Flat tax – who benefits?
The flat tax will be the right choice primarily for entrepreneurs who:
- achieve high and stable incomes,
- they do not plan to take advantage of tax relief or file jointly with their spouse.
In this case, the tax rate is 19% of income, regardless of its amount. Additionally, the health insurance contribution is lower than under the scale, at 4,9%.
The flat tax becomes particularly profitable when annual income exceeds approximately PLN 180,000.
How to make the right decision?
The final choice between a tax bracket and a flat tax should be carefully considered and tailored to individual circumstances. Not only income level is important, but also the stability of income and the possibility of taking advantage of tax relief and preferences.
The tax scale offers greater flexibility and allows for numerous tax reliefs, which is why it is often chosen by people with lower incomes and families. The flat tax, on the other hand, is a solution designed for those who achieve higher and stable incomes and value simple tax settlements.
If you're unsure which taxation method will be most beneficial for you, contact us – we'll help you make the best decision and optimize your tax settlements.
