An invoice issued, tax paid — and still no money in the account. This is everyday reality for many sole traders working for larger clients with long payment terms. Cash-basis PIT (kasowy PIT), the cash method in income tax, is meant to ease that problem: revenue arises only once the client actually pays. The solution has been in force since 1 January 2025, and from 2026 it covers a much wider group of entrepreneurs — the revenue threshold qualifying for it rose from PLN 1 million to PLN 2 million.
What cash-basis PIT actually means
Under standard rules, revenue generally arises on the day goods are delivered or a service is performed, and no later than the day the invoice is issued. Whether the client has paid is irrelevant. The entrepreneur must therefore report the revenue and pay the income tax advance out of their own funds, sometimes waiting months for the transfer. The cash method reverses this logic: the date revenue arises is the date the receivable is settled. As long as the invoice is unpaid, there is no revenue, no tax base and no advance payment. You pay tax from money you already have.
Who can choose cash-basis PIT in 2026
The cash method is available exclusively to natural persons running a business activity on their own. Partnerships and companies are excluded. The basic condition is the revenue threshold: in the year preceding the tax year, business revenue must not have exceeded PLN 2 million. This is precisely the threshold raised from 2026 — previously it was PLN 1 million, which limited eligibility to the smallest firms. Entrepreneurs starting a business during the year may choose the cash method without reference to the threshold, as they have no prior-year revenue yet.
Cash-basis PIT is available under the tax scale, the flat-rate linear tax, within the IP Box regime and under the lump-sum tax on recorded revenue (ryczałt od przychodów ewidencjonowanych). It is worth remembering that the cash method in income tax is a separate arrangement from VAT cash accounting available to small taxpayers — choosing one does not automatically mean choosing the other.
Which transactions the cash method covers
This is the most frequently overlooked element of the whole design. Cash-basis PIT applies only to revenue from transactions between entrepreneurs (B2B), and only where the transaction is documented by an invoice. Sales to consumers are settled under general rules, i.e. on an accrual basis — as before. The cash method also does not cover transactions with related entities or with entities from countries applying harmful tax competition. In practice this means two ways of recognising revenue may operate in parallel within one business, and the accounting must keep them consistently separate.
Costs are settled on a cash basis too
The cash method works both ways. If you choose it, tax-deductible costs arising from transactions with another entrepreneur are deducted only in the tax year in which you settled the liability — and no earlier than the date the cost was incurred. An unpaid purchase invoice will therefore not reduce your tax base. The exception is depreciation write-offs on fixed assets and intangible assets, which are settled under the existing rules regardless of when payment is made. For a business that buys on prepayment and sells on deferred terms, cash-basis PIT is often very advantageous. For a business in the opposite position — not necessarily.
The two-year limit and business closure
Deferring revenue is not open-ended. Revenue must be recognised no later than the day on which two years elapse from the date the invoice was issued — even if the client never paid. The second limit is the closure of the business: if you do not receive payment before that day, you report the revenue from issued invoices no later than the closure date, even if two years have not yet passed. There is also a separate record-keeping obligation — a taxpayer applying the cash method keeps a register of invoices documenting revenue settled this way, alongside the tax revenue and expense ledger (PKPiR) or the revenue register.
How and by when to notify your choice
You notify the head of the tax office of your choice of cash-basis PIT by way of a statement — in writing or electronically via e-Urząd Skarbowy (the e-Tax Office). For entrepreneurs continuing their activity, the deadline is 20 February of the tax year in which the method is to apply. If you start a business during the year, you file the statement by the 20th day of the month following the month in which the activity began; if you start in December, by the end of the tax year. Once made, the choice also applies in subsequent years, so it does not need to be repeated annually. Withdrawal is governed by the same 20 February deadline: by that day you notify the office that you are returning to general rules for the given year.
Is cash-basis PIT worth it for your business
The cash method does not reduce your tax — it shifts when you pay it. The greatest benefit goes to service and subcontracting firms with predominantly B2B sales, long payment terms and a real risk of delays. Less is gained by entrepreneurs selling mainly to consumers, receiving payment upfront, or bearing large costs settled on deferred terms. Before deciding, it is worth working through the structure of your own sales and purchases, and assessing whether your accounting software and record-keeping can handle two methods running in parallel.