Is the allowance (“zapomoga dla pracownika”) granted to an employee as part of financial aid considered taxable income and subject to social insurance contributions?
June 16, 2025
In general, both cash and non-cash benefits provided to employees are considered income from employment. However, sometimes an employer wants to support an employee who is going through a difficult life situation. This raises the question of whether financial aid provided in such exceptional circumstances also counts as taxable income for the employee.
Employee welfare – when is the allowance tax-free?
The Personal Income Tax Act (PIT) provides for a specific exemption in such cases. Financial aid granted due to individual random events, natural disasters, long-term illness, or death is exempt from PIT, but the exemption limit depends on the source of funding. If the employer finances the aid from:
- a social fund,
- the company’s social benefits fund,
- trade union funds,
- or according to separate regulations issued by the competent minister
then the aid is exempt from tax regardless of the amount. If the aid is funded from other sources, it is exempt only up to PLN 6,000 per tax year.
What is an allowance?
Although the PIT Act does not define the term “allowance” (zapomoga), based on its commonly understood meaning, it refers to a one-time financial benefit intended to provide financial support to a person who, for valid reasons, is in a difficult life situation. Thus, financial aid is essentially non-repayable and supportive in nature, typically granted due to personal misfortune, natural disasters, chronic illness, or death.
Employee allowance: in what forms can it be provided?
An example of such financial aid could be providing meals to an employee suffering from a long-term illness. This form of aid would be exempt from income tax, with the extent of the exemption depending on the funding source: If the employer uses operating funds, the aid will be tax-exempt up to PLN 6,000 per year. If the aid comes from the social fund, it is fully tax-exempt, regardless of the amount.
When is an employee allowance exempt from social security contributions?
When it comes to ZUS (social insurance) contributions, the rules are slightly different. According to the regulation issued by the Minister of Labour and Social Policy on the detailed rules for determining the base for pension and disability insurance contributions, such financial aid is exempt from contributions regardless of the funding source. According to the regulation, any aid granted due to natural disasters, individual unforeseen events, or long-term illness does not count towards the base for calculating social insurance contributions.
