IKZE, that is, an Individual Retirement Guarantee Account, gives you the opportunity to save for future retirement, and at the same time, payments can be deducted from income in your annual tax return. How much we deduct depends on how much we paid, how and at what rate our income is taxed.
The IKZE payment limit in 2022 is PLN 7,106.40, and in the case of the self-employed it is higher and amounts to PLN 10,659.60. In the case of an annual settlement, when the return is filed, the taxpayer deducts the payments from the income.
The tax refund for 2022, depending on the tax threshold, could be up to PLN 2274.05, and up to PLN 3411.07 for self-employed persons (if a particular person settles on the tax scale and falls within the second limit, i.e. 32% rate.).
After the introduction of the Polish deal, due to the increase in the tax-free amount (up to PLN 30,000) and the second tax limit to PLN 120,000. PLN and at the same time lowering the first tax rate to 12 percent, the benefits of saving in the IKZE are lower in the case of people with low and middle incomes.
– Today we can make tax savings, but remember that we have to pay 10% tax on withdrawals. The tax-exempt amount is currently 30,000. zlotys. For example, an employee with minimum wage in the current year will not exceed an income of PLN 30,000. zlotys. As a result, when paying in IKZE, he will not settle this amount in the annual tax return – says Piotr Juszczyk, chief tax advisor at InFakt.
There are already the first signs that payments to IKZE may fall this year.
– Comparing November 2021 with November 2022, we did not notice a significant decrease in IKZE sales on an annual basis. However, it must be borne in mind that December is usually the month when a large number of customers not only register with IKZE for the first time, but also pay for historically open registries using the annual limit (usually once). However, when compared year-on-year over the first days of December, sales results drop significantly (on individual days the decline is between 30 and 50 percent yoy). The tax benefits resulting from a decrease in the amount of income tax from 17% to up to 12 percent effectively negatively affect people in the first tax bracket and are not a sufficient incentive to save – says Interia Mateusz Gołąb, member of the UNIQA TFI Board of Directors. As he points out, the decision to save in this model is additionally affected by historical rates of return in 2022, which are negative across all asset classes.
– Plus high inflation – above 17%. The lack of wealth in our clients’ wallets discourages saving. On the basis of the first week of December, it’s hard to estimate precisely how big the drop in sales would be, but a drop of 30-40 percent. It wouldn’t be a surprise in the current situation – UNIQA TFI board member adds.
In 2023, the payment limit will be 8,322 PLN and 12,483 PLN for self-employed persons.
– The total income with the minimum wage will be PLN 33,708 next year, of which PLN 30,000 is free, so deduction will only be possible from income in the amount of PLN 3,708. The tax advantage in the case of the minimum wage will be 445 PLN. If such an employee decides to pay a larger amount, the overpayment of more than 3708 will not reduce the tax. However, in the future, when withdrawing money, he must pay 10% tax. Of the total, i.e. PLN 832. Therefore, the question arises whether it is worth paying amounts in excess of the tax deduction – Piotr Juszczyk comments.
As Juszczyk enumerates, an entrepreneur who settles on the tax scale and whose income is in the first limit, by paying the full amount to the IKZE in 2023, i.e. PLN 12,483, would earn PLN 1,498 on taxes. However, he will pay 1,248 PLN (10%) of the payment after fulfilling the conditions. Of course, the calculation does not include any profits that the fund could make for us. However, taxpayers from the first tax bracket may not feel these benefits, and this will certainly not have a positive effect on their payments – says Juszczyk.
As he points out, for threshold two taxpayers, the situation has remained unchanged, so this profit is much higher. An entrepreneur who settles on a scale and is on the second threshold, using his limit next year will save up to PLN 3,995 in taxes.
According to an InFakt expert, it is worth considering whether taxpayers should not be able to deduct payments to IKZE, for example within a period of 5 years. This would allow taxpayers to recognize unused payments in future years. You can also go further, as with the pro-family exemption, offering the ability to deduct unused tax amount from ZUS contributions. A second solution might be to not tax the 10 percent. The rate of the value of uncut payments to IKZE in the future. However, I have concerns about whether this solution will satisfy taxpayers. Poles do not save, and earnings in the distant future may not be a sufficient incentive – assesses an inFakt expert.
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