Tax-deductible costs - what you can deduct as a business expense

What is a tax-deductible cost?

Under Article 22(1) of the PIT Act, a tax-deductible cost (koszt uzyskania przychodu) is an expense incurred to earn revenue or to maintain or secure its source. Put simply: if a purchase helps you earn money or keep the business running, as a rule you can settle it and thereby reduce your tax base.

For an expense to count as a cost, four conditions must be met together. These conditions determine whether the tax office will accept the purchase during a possible audit.

• The expense was actually incurred by you and was not reimbursed to you.
• It is connected with the business activity you conduct - it serves to earn revenue or secure its source.
• It is properly documented, e.g. with an invoice, a bill or an internal voucher.
• It is not on the list of expenses excluded from costs (Article 23 of the PIT Act).

Bear in mind that it is the entrepreneur who must be able to justify the connection between the expense and the business. Each case is assessed individually, so for unusual purchases it is wise to confirm the classification with an accountant before entering the expense in your records.

Equipment, software and subscriptions

Equipment needed for work is one of the most common cost categories - a computer, laptop, monitor, printer, phone, office furniture or tools. How it is settled depends on the value of the purchase.

• Equipment worth up to PLN 10,000 net can be deducted in full at once, in the month of purchase.
• Equipment worth more than PLN 10,000 is, as a rule, a fixed asset and is settled over time through depreciation write-offs (e.g. a computer at a rate of 30% per year).
• Software worth more than PLN 10,000 is an intangible asset, amortised over at least 24 months.

Current subscriptions and software on a subscription model - an office suite, invoicing software, a CRM, design tools or hosting - are settled on an ongoing basis as a cost in the month they relate to. The condition is an invoice issued to the company's details and genuine use in the business.

A car in the business - with limits

A passenger car can be a large cost, but for a car also used privately restrictions apply. They concern both income tax and VAT, which is why settling a car is one of the trickier topics for a sole proprietorship (JDG).

Running costs and VAT

With so-called mixed use (business and private), you can include 75% of running costs as a tax-deductible cost - fuel, servicing, parts, insurance. The full 100% is available only when the car is used exclusively in the business, which requires, among other things, a mileage log and a VAT-26 notification. With mixed use you can deduct, as a rule, 50% of VAT, and the non-deductible part increases the cost.

Vehicle value limits

From 2026, depreciation and part of the costs of a passenger car are limited by its value. For combustion cars with CO2 emissions of 50 g/km or more the limit is PLN 100,000, for low-emission cars below 50 g/km it is PLN 150,000, and for electric and hydrogen vehicles it is PLN 225,000. Because these rules are complex, it is worth entrusting the car's accounting to an accountant.

Phone, internet, office and premises

A phone subscription and internet used in the business are a cost - based on an invoice issued to the company. If you also use the same number privately, you include only the business part in your costs, in a reasonable proportion that you must be able to justify.

Tenants of premises or an office include rent and running charges in their costs based on an invoice or contract. Increasingly, however, business is conducted at home - and this too can be a cost.

A home office in a house or flat

If you work in your own flat, you can include part of the costs of the premises - rent, electricity, heating or internet - in proportion to the area used for the business relative to the total area of the flat. You determine this proportion yourself and most often document it with an internal voucher with the relevant bills attached.

Training, marketing, outsourced services and ZUS

Many ancillary business expenses also reduce income, provided they are connected with the business and documented with an invoice.

• Training, courses, conferences and industry literature that build skills used in the business.
• Marketing and advertising - online campaigns, business cards, a website, promotional materials.
• Outsourced services - accounting, legal support, subcontractors, tool subscriptions.
• ZUS social security contributions - these can be included in costs or deducted from income.

Under the tax scale and the flat tax, you can include ZUS social security contributions in costs or deduct them from income - the effect is similar. In 2026, under the flat tax, the health contribution may be included in costs or deducted from income, but only up to an annual limit of PLN 14,100. We will calculate and present the way of settling the contributions, and the choice is yours.

What you CANNOT deduct as a cost

Some expenses are excluded from costs under Article 23 of the PIT Act - even if intuitively they seem connected with the business. Entering them in your records risks a correction and interest during an audit.

• Expenses of an entertainment nature - in particular catering services, food and drinks, including alcohol.
• Fines as well as penalties imposed in criminal, fiscal-penal, administrative and petty-offence proceedings.
• Private expenses unrelated to the business - this is the most common cause of disputes with the tax office.
• Part of the VAT on a passenger car (usually 50%) if you are entitled to deduct it.
• Repayment of the principal part of loans and credits, and income tax itself.

The line between advertising (a cost) and entertainment (not a cost) can be thin, as can the assessment of whether a purchase is for business or private use. When in doubt, it is worth asking an accountant before entering the expense.

Costs and the lump-sum tax - an important difference

Everything written above applies to forms in which the tax is calculated on income - that is, the tax scale and the flat tax. The lump-sum tax on recorded revenue (ryczalt) works differently.

Under the lump-sum tax, the tax is calculated on revenue, without reducing it by tax-deductible costs. This means that under this form business costs are not 'written off' - buying equipment or fuel will not reduce the tax. You can, however, reduce your revenue by the social security contributions you have paid and by 50% of the health contribution paid, and on top of that by the deductions listed in Article 11 of the Lump-Sum Tax Act - among others payments to an IKZE (individual retirement security account), donations, the internet relief (up to PLN 760), the rehabilitation relief, the thermal modernisation relief and the historic monuments relief.

That is why the ability to deduct costs is one of the factors to consider when comparing forms of taxation. We will calculate and present the level of costs and the effects of each form, and you make the decision yourself.

How to document a cost correctly?

Without proper documentation, an expense cannot enter the records - even if it genuinely took place. The basic proof is an invoice issued to your company's details, with a tax identification number (NIP). From 2026, the revenue and expense ledger (KPiR) also has new columns for the e-invoice number and the counterparty's NIP.

• An invoice or bill in the company's name - the basic document for most costs.
• An internal voucher - for expenses without an invoice, e.g. the proportion of flat costs; it should contain the date, description and value of the transaction.
• Confirmations of bank and postal payments, fiscal reports, accounting notes.
• Keep documents for at least 5 years in case of an audit.

Professional online accounting ensures that every cost is properly documented and recorded in the correct period. This way you settle everything you are entitled to, without the risk of the tax office challenging the expenses.