Browse By

BIR Tax Rules for Mixed Income Earners (2018)




What are the applicable tax rules for mixed income earners under the approved Tax Reform for Acceleration and Inclusion or TRAIN?

You can find the answer below.


(UPDATE): The BIR’s Revenue Regulations RR 8-2018 contains the implementing guidelines on how to compute income taxes for Mixed Income earners under the TRAIN law. View here sample computations: BIR Sample Computation: Income Tax for Mixed Income Earners under TRAIN


First, who are Mixed Income Earners?

Mixed income earners refer to individuals receiving income from various sources, including compensation as a salaried employee, income from business, or gross receipts from the practice of profession, among others.

For mixed income earners, the relevant provision in the TRAIN tax reform states that:

“Taxpayers earning both compensation income and income from business or practice of profession shall be subject to the following taxes:

  1. All Income from Compensation – The rates prescribed under Subsection (A)(2)(a) of this Section.
  2. All Income from Business or Practice of Profession

(a) If Total Gross Sales and/or Gross Receipts and Other Non-operating Income Do Not Exceed the VAT Threshold as Provided in Section 109(BB) of this Code – The rates prescribed under Subsection (A)(2)(a) of this Section on taxable income, or eight percent (8%) income tax based on gross sales or gross receipts and other non-operating income in lieu of the graduated income tax rates under Subsection (A)(2)(a) of this Section and the percentage tax under Section 116 of this Code.

(b) If Total Gross Sales and/or Gross Receipts and Other Non-operating Income Exceeds the VAT Threshold as Provided in Section 109(BB) of this Code – The rates prescribed under Subsection (A)(2)(a) of this Section.”

Tax Rules for Mixed Income Earners

Simply speaking, mixed income earners will be taxed this way:

1. For the compensation they receive as a salaried employee, the gross amount will be taxed using the graduated Personal Income Tax Rates and Tax Tables. We summarize below the TRAIN-mandated BIR personal income tax tables effective January 1, 2018.

BIR Income Tax Table (for the years 2018-2022)

BracketTaxable Income per YearIncome Tax Rate
1P250,000 and below0%
2Above P250,000 to P400,00020% of the excess over P250,000
3Above P400,000 to P800,000P30,000 + 25% of the excess over P400,000
4Above P800,000 to P2,000,000P130,000 + 30% of the excess over P800,000
5Above P2,000,000 to P8,000,000P490,000 + 32% of the excess over P2,000,000
6Above P8,000,000P2,410,000 + 35% of the excess over P8,000,000
Source:www.pinoymoneytalk.com

BIR Income Tax Table (from year 2023 onwards)

BracketTaxable Income per YearTax Rate
1P250,000 and below0%
2Above P250,000 to P400,00015% of the excess over P250,000
3Above P400,000 to P800,000P22,500 + 20% of the excess over P400,000
4Above P800,000 to P2,000,000P102,500 + 25% of the excess over P800,000
5Above P2,000,000 to P8,000,000P402,500 + 30% of the excess over P2,000,000
6Above P8,000,000P2,202,500 + 35% of the excess over P5,000,000
Source:www.pinoymoneytalk.com

2. For the income they receive from business or practice of profession (example: consultants, freelancers, lecturers, part-timers, etc.), it will be taxed similar to the tax rate for self-employed and professionals.

That is, if the annual gross sales from business or income receipts from the practice of profession does not exceed the VAT threshold of P3 Million, the mixed income earner may choose one of these two tax rates:

A.) Eight percent (8%) of gross sales or receipts and other income, in excess of P250,000; OR

B.) Graduated personal income tax rates of 0% to 35% on net taxable income

However, if the income receipts from business or practice of profession exceed the P3 Million VAT threshold, the income will be automatically taxed using the graduated income tax tables. This means the mixed income earner does not have the option of paying the flat 8% rate.


(UPDATE): The BIR’s Revenue Regulations RR 8-2018 contains the implementing guidelines on how to compute income taxes for Mixed Income earners under the TRAIN law. View here sample computations: BIR Sample Computation: Income Tax for Mixed Income Earners under TRAIN


* * * For more UPDATED resources on the approved TRAIN Tax Reform, click below:







View Related Posts

Ask a question or post a comment
About this post: bir atc code list 8%

7 thoughts on “BIR Tax Rules for Mixed Income Earners (2018)”

  1. Marwin says:

    Hi,

    What is Alphanumeric Tax Code (ATC) we will use for 8% Withholding TAx? They (BIR) update there module for Monthly Alphalist of Payees (MAP)?

    Thank you.

  2. Darius says:

    DO WE EFFING STILL HAVE TO FILE THE 3% PERCENTAGE TAX RETURNS? It seems to me this is not clear. They say you will elect the all-in 8% or 3% + tiered tax rates on Q1 return. However, that is still on 15APR. Meanwhile, 3% percentage tax will be due usually on FEB20. If we play safe now and pay 3% percentage tax and later after they say not required, we really don’t the hassle of refunds! Arrrghhh!

    1. Maria Consuelo B.Lauzon says:

      The first quarter income falls on May pa you can enquire further, but in our seminar no more percenrage tax only the quarterly income na lang..

  3. Anne says:

    Hi! If my current company (in which I am employed) asks me to render professional services other than what is under my contract as an employee, is it legal that I issue them receipts for my professional fee? Are there specific laws/rules that I can review for this? Thanks in advance.

  4. Mary says:

    Hello Can you make a sample computation for Self employed with OSD under TRAIN? Thanks

  5. Tony Jay Cagalingan says:

    Hi,
    I’m a mixed income earner and I understand that my salaries and professional fees are taxed separately and differently. However, for filing the quarterly income tax return for my professional service, should I still indicate the salary I get from the company I work for or should I treat it as if I’m a self-employed only and disclose only the fees that I get for my professional services?
    Thank you in advance.

  6. JOHN ALFRED L. BAJUYO says:

    Hello, good evening. Do I need to file for another TIN number or Tax sworn declaration form since I am also teaching online at night at the same time practicing my profession as public school teacher? I am using my TIN number as public school teacher, that is why I am asking if I could also use my the same TIN number on tax declaration as online tutor. Thank you!

Leave a Reply

Your email address will not be published. Required fields are marked *