Philippines income tax calculator

The reform that replaced exemptions with an exempt band

Before 2018, Philippine income tax gave a personal exemption and an additional exemption for each dependent child. The TRAIN law — Republic Act 10963 — removed both and put a ₱250,000 zero-rate band in their place.

The effect is that two Filipinos on the same taxable income now pay the same tax whether or not they have children. That is unusual among the countries covered here: Ireland, Germany, the United States and Canada all adjust the charge for family circumstances, and the Philippines deliberately stopped doing so.

In exchange, the exempt band is large relative to Philippine wages. ₱250,000 of taxable income free of charge is a materially bigger shelter than the ₱50,000 personal exemption it replaced, for most households.

Above the band there is no easing in. The rate goes straight to 15.0%. There is no 5.0% or 10.0% entry step of the kind Malaysia, New Zealand or India use, so the first peso over the threshold is charged at a rate most systems reserve for their second or third band.

On ₱600,000 of net taxable income the tax is ₱62,500 — an effective rate of 10.4% against a marginal band of 20.0%.

What "net taxable income" means, and why it is not your salary

The scale runs on net taxable compensation income, and the gap between that and gross pay is wider in the Philippines than in most systems.

Three mandatory contributions come off first: SSS for social security, PhilHealth for health insurance, and Pag-IBIG for the housing fund. All three are compulsory for employees, all three are deducted from gross before tax is computed, and none of them is in the figure above.

Thirteenth-month pay is separate again. It is a statutory payment, not a bonus, and together with other benefits it is excluded from taxable compensation up to a ceiling set in the Tax Code. That exclusion happens before the scale, so a worker's taxable income is lower than their annual cash by that amount.

Minimum wage earners are exempt outright — not merely below the threshold, but statutorily exempt on their wage, holiday pay, overtime and night shift differential. That exemption is a feature of the law rather than of the scale, and it is invisible in any rate table.

The practical instruction is simple: enter net taxable income, which is what appears on BIR Form 2316, not what appears on a payslip's gross line.

The 8% option, and who it is actually for

A self-employed individual or professional whose gross sales and receipts stay under the ₱3,000,000 VAT threshold may elect a flat 8.0% on gross receipts above ₱250,000, in place of both the graduated scale and percentage tax.

That is a genuinely different tax, not a rate variant. It runs on gross rather than on income after expenses, so it favours anyone whose costs are low — a consultant, a freelancer, most services — and penalises anyone whose margins are thin.

The comparison is arithmetic rather than a matter of judgement. The graduated scale wins whenever deductible expenses are large enough that taxable income falls well below gross receipts; the 8.0% wins when they are not. Someone billing ₱1,200,000 with almost no costs is usually better off on the flat option; someone billing the same with ₱700,000 of genuine costs is usually not.

The election is made at the right moment and applies for the year, which makes it a decision rather than a calculation done in hindsight.

This page models the graduated scale only. Anyone weighing the 8.0% option should compute both and should be aware that percentage tax disappears under the flat option, which is part of the comparison.

The BIR's own summary page shows the wrong table

This is worth stating bluntly, because it is the single biggest trap in Philippine tax figures: the BIR's income-tax page at bir.gov.ph/income-tax publishes the schedule that applied from 2018 to 2022, and does not publish the one in force.

RA 10963 enacted two schedules in the same subsection. One is headed "Tax Schedule Effective January 1, 2018 until December 31, 2022"; the other "Tax Schedule Effective January 1, 2023 and onwards". The second replaced the first at the end of 2022. The summary page carries only the first.

Both appear, correctly labelled, in the Tax Code itself, which the BIR also hosts — bir.gov.ph/tax-code, Title II, Section 24(A)(2). That is the source used here, read on 2026-09-02, and where the two disagree the Code governs.

The gap is not small. Under the superseded schedule the tax at ₱400,000 was ₱30,000; under the one in force it is ₱22,500. At ₱2,000,000 it was ₱490,000 and is now ₱402,500. At ₱8,000,000 it was ₱2,410,000 and is now ₱2,202,500. Anyone using the summary page overstates the bill at every level.

There is a second obstacle on top of that one. The rate section on the summary page is a collapsed accordion rendered in the browser, so it is absent from the HTML the server sends: fetch that URL with any ordinary tool and you get headings and no numbers. A stale table that automated readers cannot even see is how wrong figures survive for years.

This site's tests assert all five cumulative amounts from the current schedule, and separately assert that none of the four superseded ones can reappear.

The scale at four incomes

Each figure is net taxable income — after SSS, PhilHealth and Pag-IBIG, and after the exclusion for 13th-month pay and other benefits.

On ₱300,000: ₱7,500 of tax, an effective rate of 2.5% with a marginal rate of 15.0%.

On ₱600,000: ₱62,500 of tax, an effective rate of 10.4% with a marginal rate of 20.0%.

On ₱1,200,000: ₱202,500 of tax, an effective rate of 16.9% with a marginal rate of 25.0%.

On ₱2,500,000: ₱552,500 of tax, an effective rate of 22.1% with a marginal rate of 30.0%.

The effective rate climbs steadily rather than sharply, because the current schedule's middle bands — 15.0%, 20.0%, 25.0% within the first ₱2,000,000 — are five points lower at each step than the schedule that applied until the end of 2022.

How the Philippines compares with the rest of this site

Against Malaysia, the two are near-opposites at the bottom. Malaysia has almost no exempt band and eases in at 1.0% through four narrow steps; the Philippines exempts ₱250,000 and then jumps to 15.0% with nothing in between.

Against India, the resemblance is closer. Both give a substantial zero-rate slice, both have a top rate of 35.0% or near it, and both moved recently toward a simpler scale with fewer claimed deductions. India kept the option of the old regime; the Philippines did not.

Against Singapore, the contrast is the number of steps. Singapore has twelve, rising gently; the Philippines has six, rising hard. Two very different answers to the same question of how finely to slice a progressive scale.

Against the US, the missing layer again is the state and local one — plus, unusually, the family adjustments. A US return varies enormously by filing status and dependants; a Philippine one does not vary at all on those grounds.

The 8% gross option has no equivalent anywhere else on this site. A flat charge on turnover offered as an alternative to an income tax is a genuinely distinctive piece of policy.

Passive income, taxed outside the scale entirely

A large part of the Philippine system sits outside the graduated table, charged at final rates that do not interact with salary at all.

Interest on peso deposits and deposit substitutes is charged at 20.0%; interest under the expanded foreign currency deposit system at 15.0%. Royalties are 20.0% in general and 10.0% on books and on literary and musical works.

Dividends from a domestic corporation received by an individual are 10.0%. Net capital gains on shares not traded on the exchange are 15.0%. Gains on real property held as a capital asset are 6.0%, charged on the gross selling price or fair value rather than on the gain.

Prizes and winnings above ₱10,000 are 20.0%, with prizes at or below that amount folded back into the graduated rates. PCSO and lotto winnings of ₱10,000 or less are exempt.

Because these are final taxes, they are withheld and finished. They never appear on the graduated scale, they cannot be offset against it, and none of them is in the figure above.

Four ways a Philippine estimate goes wrong

Feeding the scale gross pay. SSS, PhilHealth and Pag-IBIG come off first, and so does the excluded portion of 13th-month pay and benefits. The scale never sees gross.

Still applying personal and dependent exemptions. TRAIN removed them in 2018. Any calculator that asks how many children you have and reduces the tax is running pre-2018 law.

Using the 2018–2022 rates. Every band below the top came down in 2023 — 20.0% became 15.0%, 25.0% became 20.0%, 30.0% became 25.0%, 32.0% became 30.0% — and the cumulative amounts fell with them. The BIR's own summary page still shows the old table, so this is the easiest error in the system to make.

Adding the 8% option to the graduated tax. It replaces the graduated tax and percentage tax; it is not charged alongside them, and it is not available to a purely salaried employee at all.

SSS, PhilHealth and Pag-IBIG, the three charges before tax

Every Philippine employee has three mandatory contributions deducted from gross pay, and all three come off before the income tax scale is applied. None of them is income tax and none is in the figure above.

SSS is social security: retirement, disability, sickness, maternity and death benefits. It is contributory in the strict sense — the number and level of contributions determines the pension — and it is shared between employee and employer, with the employer paying the larger share.

PhilHealth funds the national health insurance programme. Contributions are a percentage of monthly basic salary within a floor and a ceiling, split equally between employee and employer.

Pag-IBIG, the Home Development Mutual Fund, is a savings and housing loan scheme. Like Malaysia's EPF and Singapore's CPF, the balance belongs to the member rather than to a pool, which makes it closer to forced saving than to a tax.

Because all three reduce taxable income, they lower the tax as well as take-home. That is the opposite of how Australia's Medicare levy or Ireland's USC behave, which are charges on top rather than deductions before.

Substituted filing, and who cannot use it

Most Philippine employees never file a return. Where an employee has one employer for the whole year and the tax withheld equals the tax due, the employer's annual information return substitutes for the employee's own — the arrangement is called substituted filing.

The mechanism that makes it work is annualised withholding: in the final pay period the employer recomputes the year's tax on total compensation and adjusts the last deduction so the year ends square. Done correctly, nothing is left over.

It fails in identifiable cases. Two employers in the same year, income from business or practice of a profession alongside the salary, or a spouse without their own qualifying arrangement all take a taxpayer outside substituted filing and back to an annual return.

BIR Form 2316 is the document that matters either way. The employer issues it, it states the year's compensation and tax withheld, and it is the certificate a bank, an embassy or the next employer will ask for.

The tax year is the calendar year, and annual returns for individuals fall due in April following it.

The VAT threshold is a tax decision, not just a registration one

₱3,000,000 of gross sales and receipts is the line that decides whether a Philippine sole trader registers for VAT. It also decides whether the 8.0% income tax option is available at all.

That coupling makes the threshold consequential in a way registration thresholds usually are not. Crossing it changes the indirect tax treatment and simultaneously removes an income tax election, so the effect on total liability is larger than the VAT rate alone suggests.

Below the line, a non-VAT taxpayer is liable to percentage tax on gross receipts — which the 8.0% election also replaces. Above it, VAT applies at the standard rate with input credits, and only the graduated income tax scale remains available.

For a growing freelance practice this creates a genuine planning question near the threshold, and it is one of the few places in the Philippine system where the timing of income has a structural rather than a marginal effect.

None of this touches a salaried employee, for whom neither the election nor the threshold is available in the first place.

The two TRAIN schedules, band by band

TRAIN legislated a rate cut in advance and dated it. The 2018 schedule ran for five years; the 2023 schedule replaced it automatically, with no further Act needed.

Only the top rate is unchanged. 35.0% above ₱8,000,000 applies under both. Every other rate fell by five points: 20.0% to 15.0%, 25.0% to 20.0%, 30.0% to 25.0%, 32.0% to 30.0%. The thresholds did not move at all.

Because the schedule is published as a cumulative amount plus a rate on the excess, the cumulative column fell with the rates: ₱30,000 became ₱22,500, ₱130,000 became ₱102,500, ₱490,000 became ₱402,500, and ₱2,410,000 became ₱2,202,500.

Those four numbers are the fastest way to tell which table something is using, and they are the check worth running on any Philippine calculator. Identical thresholds and a different cumulative column is exactly the case where a wrong table produces figures that look right.

The saving is largest in the middle of the range. On ₱1,200,000 of taxable income the current schedule charges ₱202,500; the superseded one charged ₱250,000 — a difference of nearly ₱48,000 a year on the same income.

Mixed income, and how the two halves are treated

An individual earning both compensation and business or professional income is taxed on each half under its own rules, and the BIR is explicit about it.

Compensation always goes through the graduated scale. There is no election on that side, and the ₱250,000 exempt band is used up by it.

The business or professional half may take the 8.0% option where total gross sales and receipts stay under the VAT threshold — but the ₱250,000 deduction that a purely self-employed person enjoys under that option is not available a second time, precisely because compensation has already used it.

Above the threshold, the graduated scale applies to both halves and they are added together, which pushes the combined figure into higher bands than either half would reach alone.

The calculator on this page handles the graduated scale on a single taxable income figure. A mixed earner should compute both halves and treat the result as the starting point for the election rather than as the answer.

Questions

How much tax do I pay on ₱600,000 in the Philippines?

₱62,500 on net taxable income of ₱600,000 — an effective rate of 10.4% with a marginal rate of 20.0%. That is after SSS, PhilHealth and Pag-IBIG have already been deducted from gross pay.

What are the Philippine income tax rates?

Six bands on net taxable income: nothing up to ₱250,000, 15.0% of the excess to ₱400,000, then ₱22,500 plus 20.0% to ₱800,000, ₱102,500 plus 25.0% to ₱2,000,000, ₱402,500 plus 30.0% to ₱8,000,000, and ₱2,202,500 plus 35.0% above that. This is the schedule in Section 24(A)(2) of the Tax Code headed “Effective January 1, 2023 and onwards”.

Why do other calculators give a higher Philippine figure?

Most are using the schedule that expired at the end of 2022. RA 10963 enacted two tables, and the BIR’s own income-tax summary page still publishes only the older one. Under it the tax at ₱400,000 was ₱30,000 rather than ₱22,500, and at ₱2,000,000 it was ₱490,000 rather than ₱402,500. The current table is in the Tax Code at bir.gov.ph/tax-code.

Is there still a personal exemption in the Philippines?

No. TRAIN removed the personal exemption and the additional exemption for dependants in 2018 and replaced them with the ₱250,000 zero-rate band. Two people on the same taxable income now pay the same tax regardless of how many children they have.

Is 13th-month pay taxable?

It is excluded from taxable compensation up to a ceiling set in the Tax Code, together with other benefits; anything above the ceiling is taxable. The exclusion is applied before the scale, so it is already reflected in the net taxable income figure this calculator takes.

What is the 8% income tax option?

An election available to self-employed individuals and professionals whose gross sales and receipts do not exceed the ₱3,000,000 VAT threshold: 8.0% on gross receipts above ₱250,000, in place of both the graduated rates and percentage tax. It runs on gross rather than on income after expenses, so it favours low-cost work. It is not available to salaried employees.

Are minimum wage earners taxed?

No. Statutory minimum wage earners are exempt from income tax on their wage, and also on holiday pay, overtime pay, night shift differential and hazard pay. That exemption comes from the law rather than from the rate table, so it does not appear in any scale.

Where does the BIR publish these rates?

At bir.gov.ph/income-tax, inside a collapsed section titled INCOME TAX RATES. The table is rendered in the browser and is not in the HTML the server sends, so automated fetches of that URL come back with headings and no numbers. The figures here were read with the section expanded on 2026-09-02.