Last days to change the tax form and choose the cash-based PIT in 2025. The deadline is February 20

In a few days, the deadline for submitting important declarations by entrepreneurs will pass. Individuals running sole proprietorships and partners in certain types of partnerships are faced with the decision of choosing the optimal solution, which could result in tax savings throughout 2025.

Forms of taxation for incomes generated by entrepreneurs or partners in selected partnerships

Entrepreneurs – just like in previous years – can choose one of the three basic methods of taxing income (revenues) earned in 2025.

Each form of taxation comes with specific rules regarding tax payments, the calculation of deductible expenses, the possibility of applying tax reliefs, and affects the amount of health insurance contributions.

How to report the decision to change the tax form for 2025?

Deadline: Entrepreneurs can submit a declaration about choosing a new tax form by the 20th day of the month following the month in which the first revenue from business activity in the tax year was earned. This means that taxpayers who earned their first revenue in January 2025 must submit the declaration by February 20, 2025, at the latest.

Form: The choice of the tax form can be reported either through a written declaration submitted to the appropriate Head of the Tax Office or via the CEIDG-1 form..

Validity period: Once submitted, the declaration applies to subsequent years unless the taxpayer decides to change the tax form again within the prescribed time frame in the following year.

New for 2025: Cash-based PIT for those who face payment delays

The cash-based PIT, introduced at the beginning of this year, allows income to be recognized only when payment is actually received. This eliminates the risk of a situation where, despite the contractor not paying the invoice, the entrepreneur still has to pay tax on income they have not yet received. However, the introduction of cash-based PIT comes with the requirement to meet additional conditions and maintain precise records.

This option will be available only to individuals running sole proprietorships in relation to settlements with other entrepreneurs. To take advantage of this option, they must submit a declaration to the tax office by February 20, 2025. Returning to the previous method of settlement will only be possible after the end of the tax year.

How to make the optimal choice?

Each business has its own specifics and particular needs. To make the best choice, the entrepreneur or partner in a partnership should consider their income and expenses. It’s also important to think about available tax reliefs and preferences, as well as the requirements and consequences related to health insurance, which are tied to the chosen tax form.