Poland’s National Fiscal Information Board ruled that Polish residents working in the US can only deduct federal, not state, income taxes from their Polish PIT returns.
Proportional Deduction
Individuals working abroad, such as in the US, who maintain ties to Poland are required to report all income, including foreign earnings, for Polish tax purposes. However, double taxation is avoided through bilateral international agreements.
One method for avoiding double taxation is the proportional deduction method, allowing a proportional deduction from Polish PIT equal to the income tax paid in the foreign country.
Income Tax: Which Tax?
In countries like the US and Australia, both federal and provincial (e.g., state) income taxes are levied. While these state taxes aren’t directly covered by double taxation treaties, they are considered income tax paid in another country.
The question arises whether state income tax can be included when calculating the amount of foreign tax deductible from Polish PIT. The tax authority maintains that it cannot.
Only Federal Tax Deductible
This position is confirmed by an interpretation issued on April 3, 2026, in response to a query from a Polish citizen who has resided in the US for their entire life and recently moved to Poland permanently.
The citizen argued that they should be able to deduct the entire US income tax paid – both federal and state – from their 2025 Polish PIT. However, the tax authority reiterated that the Polish-American agreement only covers federal income tax, and constitutional law prioritizes ratified international agreements over domestic legislation.
What the NSA Ruled
In a 2021 ruling, the Supreme Administrative Court (NSA) reached a different conclusion, stating that Article 91 of the Constitution, which gives precedence to international agreements, should only apply when the agreement conflicts with domestic law.
The NSA found no such conflict in this case, as the Polish-American agreement is incomplete and doesn’t address state taxes, and the Polish PIT law does not exclude their deduction. Therefore, the NSA suggested that US workers may be able to deduct more.
Legal Basis
Individual interpretation of the Director of the KIS from April 3, 2026 (reference number 0115-KDIT1.4011.125.2026.2.MR).