IKZE TAX RELIEF – WHAT IS IT AND WHAT ARE ITS BENEFITS?

What is IKZE?

The Individual Retirement Security Account (IKZE) is a special savings account that allowsindividuals to set aside funds for retirement while benefiting from tax advantages. IKZE is part of the third pillar of the pension system in Poland and is one of the ways to independently build financial security for the future. It can be managed by banks, investment funds, brokerage houses, and insurance companies, offering significant flexibility in choosing aninstitution.

How does IKZE work?

Each year, a specific amount can be deposited into an IKZE account, subject to limits set based on the average salary in the national economy. In 2025, the limits are: 10,407.60 PLN for individuals not engaged in business activity and 15,611.40 PLN for individuals conducting non-agricultural business activity.

Funds accumulated in an IKZE account can be invested in various financial instruments, suchas investment funds, stocks, bonds, or insurance products. The choice of an investment model depends on the saver’s individual strategy and risk tolerance.

The primary benefit of IKZE is the ability to deduct contributions from taxable income, reducing the personal income tax due for the year. This is a significant advantage for those looking to optimize their tax obligations while simultaneously building retirement savings.

Upon reaching the age of 65 and making contributions for at least five years, the accumulatedfunds can be withdrawn, subject to a 10% flat tax. However, if the saver decides to withdraw the funds earlier, they will be taxed according to the general tax scale in effect at that time.

Is IKZE worth it?

IKZE is an attractive option for individuals who want to consciously build their retirementcapital while taking advantage of tax incentives. By deducting contributions from taxable income, one can reduce current tax liabilities while benefiting from preferential taxation upon withdrawal.

Another advantage of IKZE is the flexibility in choosing the managing institution and investment strategy. This allows savers to tailor their approach to their needs and preferences, opting for safer financial products or riskier investments with potentially higher returns.

However, it is essential to remember that IKZE is a long-term investment, and withdrawingfunds before the age of 65 may result in taxation under the general tax rules. Therefore, the decision to use this solution should be well thought out and aligned with individual financial goals.

In summary, IKZE is one of the most attractive savings tools available in Poland. It enablesindividuals to build their retirement capital while enjoying current tax benefits. It is an excellent solution for those thinking about their financial future and wanting to secure an additional source of income in retirement.