Depreciation of fixed assets
in 2026 — methods and rates
Depreciation seems complicated at first glance — KŚT, rates, methods, limits. As a chartered auditor, I see companies miscalculating depreciation every year, losing money on taxes or exposing themselves to tax authority warnings. In this article, I break down depreciation into practical pieces: what it's for, what methods exist, what 2026 rates apply, and who can benefit from one-off deductions.
Why depreciation at all?
Before we move to rates and methods, you need to understand the concept. Depreciation is spreading the cost of a fixed asset across many years — because you actually use it that long.
Example: You buy a car for PLN 100,000. You can't deduct the entire amount as a business expense in the year of purchase — that would be unfair and illegal. Instead, you spread this cost over (usually) 5 years, taking a PLN 20,000 deduction each year.
Depreciation is:
- A cost for tax purposes (reduces profit, reduces income tax)
- A physical mechanism (the asset physically wears out, ages)
- An obligation — every entrepreneur must maintain records and depreciate correctly
KŚT — what is it and why you need it
KŚT (Classification of Fixed Assets) is an official catalog issued by the Ministry of Finance. Every fixed asset — car, building, machine — has an assigned group and subgroup in KŚT. The group determines depreciation rate.
KŚT Structure:
- Single-digit groups (1–10): e.g., group 7 is machinery and transport equipment
- Two-digit subgroups: e.g., 74 is vehicles
- Three-digit types: e.g., 741 is personal cars
A few KŚT examples:
- KŚT 011 — land — rate 0% (land is not depreciated)
- KŚT 021 — residential buildings — rate 1.5–2.5% annually (40–50 years)
- KŚT 022 — commercial buildings — rate 2.5–5% annually (20–40 years)
- KŚT 335 — production machinery — rate 10% annually (10 years)
- KŚT 741 — personal cars — rate 20% annually (5 years)
- KŚT 742 — trucks — rate 20% annually (5 years)
If you don't know the correct KŚT code for your asset, check the official register at stat.gov.pl or consult an accountant. Incorrect classification can cause problems with tax authorities.
Three depreciation methods
Polish tax law allows three methods. You can choose a method, but it must be consistently applied to a KŚT group.
1. Linear method (most popular)
The deduction is equal each year. This translates to a simple formula:
Example: Car for PLN 100,000, rate 20% (5 years)
Annual deduction = PLN 100,000 / 5 = PLN 20,000 annually
Pros and cons:
- ✓ Simple to calculate — each year identical costs
- ✓ Widely used, every accountant knows it
- ✗ Doesn't account for faster wear in early years
- ✗ Not tax-efficient (deductions are spread evenly)
Linear method is mandatory for personal cars.
2. Accelerated method (expedited)
Higher deduction in early years, declining in later years. Better reflects actual wear — things wear more at the beginning.
Example: Machine for PLN 100,000, rate 10%, coefficient 1.4
Year 1: PLN 100,000 × 10% × 1.4 = PLN 14,000
Year 2: (PLN 100,000 - PLN 14,000) × 10% × 1.4 = PLN 12,040
Year 3: (PLN 86,000 - PLN 12,040) × 10% × 1.4 = PLN 10,374
(and so on, declining)
Pros and cons:
- ✓ More tax-efficient — higher deductions upfront
- ✓ Better reflects actual wear
- ✗ More complex — requires knowledge of coefficients
- ✗ Not available for personal cars and buildings
Accelerated method is available for machinery, equipment, transport (excluding personal cars).
3. One-off method (for selected taxpayers)
Full deduction in year of purchase. Entire value becomes a business expense in year "0".
Example: You buy equipment for PLN 50,000 on March 15, 2026.
2026 deduction = PLN 50,000 (entire amount in 2026, no depreciation in later years)
Pros and cons:
- ✓ Maximum tax-efficient — large deduction in acquisition year
- ✓ Simple to administer — no subsequent years
- ✗ Available only for small taxpayers or startups
- ✗ Limited: PLN 213,000 in 2026
- ✗ Not available for personal cars
One-off depreciation limit in 2026
One-off depreciation is a nice benefit, but not for everyone and not unlimited.
Who can use it?
- Small taxpayers — in previous tax year gross revenue did not exceed PLN 2,000,000
- Entrepreneurs starting business — first 3 years of business operations
What is the limit?
In 2026 the one-off depreciation limit is PLN 213,000. This amount is a conversion of EUR 50,000 to zloty — the National Bank announces a new rate on October 1 each year (for the following year).
On October 1, 2025 rate (4.2586 PLN/EUR), the National Bank converted EUR 50,000 to PLN 212,930, rounded to PLN 213,000.
Which assets can be one-off depreciated?
Not everything. One-off depreciation applies only to assets in KŚT groups 3–8, excluding personal cars.
This means:
- ✓ Can: machinery, equipment (group 3), tools (group 4), trucks (group 7), software (group 8)
- ✗ Cannot: personal cars (group 7, subgroup 741), buildings (group 2)
Important exception
The PLN 213,000 limit does not include assets with initial net value below PLN 10,000. This means any purchase below PLN 10,000 you can immediately expense (if you qualify as small taxpayer), without counting towards the limit.
Personal cars — value limits in 2026
Personal cars have special restrictions. You cannot depreciate value higher than the limit — the excess part becomes an expense (or not at all).
Limits for personal cars:
- CO₂ emissions ≥ 50 g/km (combustion cars) — limit: PLN 100,000
- CO₂ emissions < 50 g/km (hybrid, low-emission) — limit: PLN 150,000
- Electric and hydrogen cars — limit: PLN 225,000
Example: You bought a combustion car for PLN 120,000. Limit is PLN 100,000. You depreciate PLN 100,000 over 5 years (PLN 20,000 annually). The remaining PLN 20,000 is a black hole — you cannot expense it as business cost.
Buildings and structures — 2026 novelty
From 2026, a change has been introduced for buildings and structures in municipalities with high unemployment.
Buildings (regardless of construction date) can be depreciated at an accelerated rate if they meet time conditions regarding construction formalization (permits, final decisions, etc.). This applies to both new and existing buildings.
Rates for buildings:
- Residential buildings: 1.5–2.5% annually (40–50 years)
- Commercial buildings: 2.5–5% annually (20–40 years)
- Structures (bridges, roads, networks): 2.5–5% annually (20–40 years)
Fixed assets record — obligation for all
Regardless of whether you're on flat rate or simplified accounting, or linear tax — you must maintain records.
Record should contain for each asset:
- KŚT code
- Description (e.g., "Mercedes Sprinter truck XYZ")
- Acquisition date and date placed in service
- Initial value (net)
- Depreciation method (linear, accelerated, one-off)
- Annual depreciation rate
- Number of depreciation years (useful life)
- Annual depreciation deduction
- Accumulated depreciation (how much you've deducted)
- Net value at year-end
Keep records for 5 years — can be paper or digital, but must be complete and reproducible.
Practical examples
Example 1: Small taxpayer buys a laptop
You're a small taxpayer (revenue < PLN 2,000,000). You buy a laptop for PLN 8,000 net (KŚT 874).
Option A (one-off): If this is your first equipment, you can expense the entire PLN 8,000 in the purchase year. This doesn't count towards the PLN 213,000 limit (because it's below PLN 10,000).
Option B (linear): You depreciate the laptop over 4 years (rate ~25%). Annual deduction: PLN 8,000 / 4 = PLN 2,000.
Example 2: Startup buys a machine
You're in year 1 of business (startup). You bought a machine for PLN 150,000 net (KŚT 333). Accelerated rate for machinery is 10%, coefficient 1.4.
Deductions in early years:
- Year 1: PLN 150,000 × 10% × 1.4 = PLN 21,000
- Year 2: PLN 129,000 × 10% × 1.4 = PLN 18,060
- Year 3: PLN 110,940 × 10% × 1.4 = PLN 15,532
But wait! One-off depreciation limit is PLN 213,000. If this is your first major purchase, you can expense the entire amount in year 1. Deduction = PLN 150,000 in purchase year. No depreciation in later years.
Example 3: Company buys an electric car
You bought an electric car for PLN 180,000 net. Limit for electric cars is PLN 225,000 — you're within limits. Depreciation rate: 20% linear (5 years).
Annual deduction = PLN 180,000 / 5 = PLN 36,000 over 5 years.
If you were a startup, you could one-off depreciate part (up to PLN 213,000), but this car costs less, so you could one-off the entire amount in year 1.
Common company mistakes
1. Not using one-off depreciation when available
Many small taxpayers don't realize they can one-off depreciate up to PLN 213,000 annually. This is free money — immediate expense instead of spread across years.
2. Incorrect KŚT classification
Classifying a machine as a tool (wrong group) can change depreciation rate by 50%. Always verify with the official KŚT register.
3. Not maintaining proper records
Tax authorities check depreciation records in audits. Errors in calculation or missing documentation can result in fines.
4. Depreciation below personal cars limits
Many don't account for the PLN 100,000–225,000 car limits. Buy a car for PLN 150,000 with regular limits? You lose PLN 50,000.
5. Forgetting 5-year retention requirement
Disposal records must be kept 5 years. If you can't prove you depreciated an asset, you're liable for back taxes.