Income Tax Philippines Calculator

The Philippines uses TRAIN Law brackets (effective January 1, 2023) for annual taxable compensation: ₱0–₱250,000 at 0%; ₱250,001–₱400,000 at 15% of excess over ₱250,000; ₱400,001–₱800,000 at ₱22,500 plus 20% of excess over ₱400,000; ₱800,001–₱2,000,000 at ₱102,500 plus 25% of excess over ₱800,000; ₱2,000,001–₱8,000,000 at ₱402,500 plus 30% of excess over ₱2,000,000; over ₱8,000,000 at ₱2,202,500 plus 35% of excess over ₱8,000,000. These brackets are unchanged from the 2023 revision and remain in effect for 2025.

The Tax Reform for Acceleration and Inclusion (TRAIN) Law, officially Republic Act 10963, took effect January 1, 2018 and was revised effective January 1, 2023. It restructured personal income tax brackets to exempt low-income earners (annual income ≤ ₱250,000 pays zero income tax), reduced rates for middle-income earners, and offset revenue losses by raising excise taxes on fuel, vehicles, tobacco, and sweetened beverages. The 2023 revision further reduced rates at the mid-income range compared to the initial 2018 schedule.

The Social Security System (SSS) employee contribution is 4.5% of monthly salary, capped at a monthly salary credit (MSC) of ₱30,000. The maximum monthly employee contribution is therefore ₱1,350 (₱30,000 × 4.5%). The employer matches this with an additional 9.5%. SSS contributions fund retirement, disability, sickness, maternity, and death benefits.

PhilHealth (Philippine Health Insurance Corporation) contribution is 5% of monthly basic salary, split equally between employer and employee (2.5% each). The maximum monthly basic salary for computation is ₱100,000, so the maximum monthly employee contribution is ₱2,500. PhilHealth premiums fund inpatient and outpatient healthcare benefits under the Universal Health Care Act.

For monthly salaries of ₱1,500 and above, the Pag-IBIG (HDMF) employee contribution is 2% of monthly compensation, with a maximum employee contribution of ₱100 per month. The employer also contributes ₱100, making the combined monthly contribution ₱200. Higher voluntary contributions are allowed and earn dividends. Pag-IBIG funds finance housing loans for members.

Yes. Mandatory SSS, PhilHealth, and Pag-IBIG contributions are excluded from gross compensation before computing income tax. This means your annual taxable compensation equals gross annual income minus total mandatory contributions. For example, a ₱30,000/month earner has annual gross ₱360,000 minus annual contributions of approximately ₱18,600 = taxable ₱341,400, which falls in the 15% bracket.

The 13th month pay is exempt from income tax up to ₱90,000 per year. This exemption covers not just the mandated 13th month pay under Presidential Decree 851, but also Christmas bonuses, productivity incentives, and similar one-time payments — the combined total must not exceed ₱90,000 for full exemption. Any excess above ₱90,000 is added to taxable compensation and taxed at the applicable TRAIN bracket.

Employees receiving purely compensation income from a single employer where the employer withholds correct taxes are generally exempt from filing an ITR (substituted filing applies). However, you must file BIR Form 1700 if: you have two or more employers in the year, you have income from sources other than compensation, you are a non-resident alien, or you have income from mixed sources. Self-employed individuals file BIR Form 1701. The April 15 annual filing deadline applies.

Withholding tax on compensation (BIR Form 1601-C) is the mechanism by which employers withhold income tax from employee salaries and remit it to the BIR monthly. The tax withheld is computed using the TRAIN Law bracket applied to annual taxable compensation, then divided into monthly instalments. Because the employer withholds and remits on the employee's behalf, most salaried workers with a single employer do not need to file a year-end ITR.

Gross compensation income is total earnings before any deductions, including basic salary, overtime, allowances, and bonuses. Taxable compensation is gross income reduced by: non-taxable allowances (up to ₱90,000 of 13th month pay and bonuses), mandatory SSS/PhilHealth/Pag-IBIG contributions, and statutory exclusions. Income tax is computed only on taxable compensation, not on total gross income.

Yes, overtime pay is generally included in gross compensation and is subject to income tax. There is no specific exemption for overtime in the TRAIN Law. Only minimum wage earners (those receiving the statutory minimum wage in their region) are exempt from income tax on their wages, overtime pay, holiday pay, hazard pay, and night shift differential. Non-minimum wage earners pay income tax on all compensation including overtime.

This calculator takes your monthly gross salary as input and multiplies it by 12 to determine annual gross compensation. It then deducts annual SSS, PhilHealth, and Pag-IBIG contributions to arrive at annual taxable compensation, applies the TRAIN Law brackets, and divides the resulting annual tax by 12 to show your monthly withholding tax. Monthly net take-home is monthly gross minus monthly tax and mandatory contributions.

The marginal tax rate is the rate applicable to the last peso of taxable income — the highest bracket you fall into. The effective tax rate is total income tax divided by gross income — always lower than the marginal rate because lower income tiers are taxed at lower rates. For example, a ₱1,000,000 annual taxable income has a 25% marginal rate but an effective rate of about 15.25% (₱152,500 tax ÷ ₱1,000,000 gross).