The Philippines’ new tax reform bill, known as TRAIN or Tax Reform for Acceleration and Inclusion, was signed into law on December 19, 2017 and its implementation began on January 1, 2018.
What are the new income tax rates under the TRAIN law? How will TRAIN affect income taxes of individuals and corporations? How is the TRAIN tax system different from the previous Philippine tax system?
In this article, we focus on these items. Below you’ll find the new TRAIN Income Tax Tables adopted by the Bureau of Internal Revenue (BIR) with sample computations showing how income taxes will be determined under TRAIN.
First off, take note that in the new TRAIN tax law, there are two (2) sets of income tax tables to be implemented:
(1) Income Tax Tables that will be used from 2018 to 2022; and
(2) Income Tax Tables that will be used from year 2023 onwards.
NOTE: We compiled all articles related to the TRAIN law on this page: TRAIN Tax Law, Sample Computations, and BIR Implementing Guidelines. Click the link to access relevant information, such as the following useful articles on Philippine taxation.
- Are Online Sellers & YouTubers Required to Pay Taxes to BIR?
- Top 10 Highest Paid YouTubers in the Philippines
- 10 TRAIN Tax Reform Items that You Probably Didn’t Know
- BIR Sample Computations: How to Compute Taxes under TRAIN
New Income Tax Rates under TRAIN (2018-2022)
Here are highlights of the first part of the approved TRAIN tax reform law to be implemented from the year 2018 until the year 2022:
- (i) Those earning an annual salary of P250,000 or below will no longer pay income tax (zero income tax).
- (ii) Those earning between P250,000 and P400,000 per year will be charged an income tax rate of 20% on the excess over P250,000.
- (iii) Those earning annual incomes between P400,000 and P800,000 will pay a fixed amount of P30,000 plus 25% of the excess over P400,000.
- (iv) Those with yearly salaries between P800,000 and P2 million will be charged a fixed amount of P130,000 plus 30% on the excess over P800,000.
- (v) High-income earners receiving salaries between P2 million and P8 million annually will pay a fixed amount of P490,000 plus 32% of the excess over P2 million.
- (vi) Finally, the highest income tier receiving salaries of at least P8 million per year will have withholding taxes of P2.41 million plus 35% of the excess over P8 million.
The new TRAIN tax rates are as follows. Again, these rates will govern income taxes to be paid from 2018 until 2022.
| Taxable Income per Year | Income Tax Rate (Year 2018-2022) |
|---|---|
| P250,000 and below | 0% |
| Above P250,000 to P400,000 | 20% of the excess over P250,000 |
| Above P400,000 to P800,000 | P30,000 + 25% of the excess over P400,000 |
| Above P800,000 to P2,000,000 | P130,000 + 30% of the excess over P800,000 |
| Above P2,000,000 to P8,000,000 | P490,000 + 32% of the excess over P2,000,000 |
| Above P8,000,000 | P2,410,000 + 35% of the excess over P8,000,000 |
| Source: | BIR and PinoyMoneyTalk.com |
Beginning 2023, however, there will be new income tax rates that are actually lower than those implemented from 2018 to 2022.
BIR Income Tax Rates under TRAIN (2023 onwards)
From year 2023 onwards, the income tax rates will be further adjusted, that is, they will actually be lower, shown as follows:
- (i) Those earning annual salary of P250,000 or below will continue to be exempted from paying income tax.
- (ii) Those earning between P250,000 and P400,000 per year will be charged a lower income tax rate of 15% on the excess over P250,000.
- (iii) Those with annual salaries from P400,000 to P800,000 will have withholding taxes of P22,500 plus 20% of the excess over P400,000.
- (iv) Salaried employees with annual incomes between P800,000 and P2 million will be charged a fixed amount of P102,500 plus 25% on the excess over P800,000.
- (v) Those receiving salaries between P2 million and P8 million per year will be charged P402,500 plus 30% of the excess over P2 million.
- (vi) Finally, the highest income segment of employees with annual salaries of at least P8 million will pay P2.2025 million plus 35% of the excess over P8 million.
The new income tax rates from year 2023 onwards, as per the TRAIN law, are as follows.
| Taxable Income per Year | Income Tax Rate (Year 2023 onwards) |
|---|---|
| P250,000 and below | 0% |
| Above P250,000 to P400,000 | 15% of the excess over P250,000 |
| Above P400,000 to P800,000 | P22,500 + 20% of the excess over P400,000 |
| Above P800,000 to P2,000,000 | P102,500 + 25% of the excess over P800,000 |
| Above P2,000,000 to P8,000,000 | P402,500 + 30% of the excess over P2,000,000 |
| Above P8,000,000 | P2,202,500 + 35% of the excess over P5,000,000 |
| Source: | BIR and PinoyMoneyTalk.com |
New TRAIN Income Tax Rates vs. Old Income Tax Rates
What changed in the new TRAIN tax law versus the old income tax law?
Prior to the approval of the TRAIN bill in 2018, the following tax tables were in use until the end of 2017. The income tax rates before TRAIN, which are relatively higher than the post-TRAIN tax rates, are shown below.
| Income per Year | Income Tax Rate (Before TRAIN) |
|---|---|
| P10,000 and below | 5% |
| Above P10,000 to P30,000 | P500 + 10% of the excess over P10,000 |
| Above P30,000 to P70,000 | P2,500 + 15% of the excess over P30,000 |
| Above P70,000 to P140,000 | P8,500 + 20% of the excess over P70,000 |
| Above P140,000 to P250,000 | P22,500 + 25% of the excess over P140,000 |
| Above P250,000 to P500,000 | P50,000 + 30% of the excess over P250,000 |
| Above P500,000 | P125,000 + 32% of the excess over P500,000 |
| Source: | BIR and PinoyMoneyTalk.com |
Here are major items that changed when we compare the old (pre-TRAIN) tax tables versus the new TRAIN income tax tables.
- 1) income brackets were streamlined and reduced to just six (6) from seven (7) brackets;
- 2) taxable income threshold per bracket has been adjusted upwards;
- 3) tax rate charged on each taxable income bracket was revised, mostly lowered;
- 4) annual gross income eligible for tax exemption has been adjusted upwards from the amount of minimum wage previously to P250,000 in the new tax tables; and
- 5) personal exemption (P50,000) and additional exemptions (maximum of P100,000, if taxpayer has four dependents) were removed.
Under the TRAIN law, salaried individuals earning annual gross compensation of P250,000 or below are now exempted from paying income taxes. This is a drastic change from the past, wherein only minimum wage earners were exempted.
What happened to personal and additional exemptions in the new TRAIN Income Tax law? The new TRAIN tax law removed these monetary exemptions previously enjoyed under the old Philippine tax system.
The Personal Exemption, amounting to P50,000, and additional exemption of P25,000 per qualified dependent (maximum of P100,000 additional exemptions for a taxpayer with four (4) dependents) are now gone under the TRAIN law.
Sample Income Tax Computations under TRAIN (2018 to 2022)
How to compute income taxes under the new TRAIN law?
The Bureau of Internal Revenue (BIR) explained this in Revenue Regulation No. 8-2018 (RR 2018) which the BIR released in 2018. The formula to follow is simple. The formula to compute income tax due, under the graduated income tax rates of TRAIN, is:
INCOME TAX DUE = a + (b x c)
where: a = Basic Amount of Annual Income;
b = Additional Rate; and
c = Of the Excess over
To recap, here’s the graduated income tax tables under TRAIN to be implemented from 2018 until 2022.
The income tax payable can be computed as follows:
| Range of Taxable Income | TAX DUE = a + (b x c) | |||
|---|---|---|---|---|
| Over | Not Over | Basic Amount (a) | Additional Rate (b) | Of Excess Rate (c) |
| - | P250,000 | - | - | |
| P250,000 | P400,000 | - | 20% | P250,000 |
| P400,000 | P800,000 | P30,000 | 25% | P400,000 |
| P800,000 | P2,000,000 | P130,000 | 30% | P800,000 |
| P2,000,000 | P8,000,000 | P490,000 | 32% | P2,000,000 |
| P8,000,000 | - | P2,410,000 | 35% | P8,000,000 |
| Source: | BIR & | PinoyMoneyTalk.com | ||
So, for example, an employee with taxable income of P300,000 per year, will fall under the income bracket P250,000-P400,000. The income tax due is as follows:
- a = Basic Amount of Annual Income = Zero (0)
- b = Additional Rate = 20%
- c = Of the Excess over P250,000 = P50,000
- INCOME TAX DUE = 0 + (20% * P50,000) = P10,000
Thus, an employee earning taxable income of P300,000 per year will pay income tax amounting to P10,000 under TRAIN.
With tax due of P10,000 on annual income of P300,000, the effective income tax rate charged to this taxpayer is only 3.33%.
How about someone making P1 Million a year? What’s the income tax payable? Same formula to use.
Using the table above, we can see that the taxpayer falls under the tax bracket P800,000-P2,000,000. Thus, the tax due is:
- a = Basic Amount of Annual Income = P130,000
- b = Additional Rate = 30%
- c = Of the Excess over P800,000 = P200,000
- INCOME TAX DUE = P130,000 + (30% * P200,000) = P190,000
The salaried employee earning P1 Million will thus pay income tax of P190,000 under the new TRAIN tax tables.
Paying P190,000 income tax on taxable income of P1 Million, the taxpayer is therefore charged an effective income tax rate of 19%.
Sample Income Tax Computations under TRAIN (2023 Onwards)
Take note that part 2 of the TRAIN tax rates will take effect beginning year 2023.
The formula to follow, though, is still the same:
| Range of Taxable Income | TAX DUE = a + (b x c) | |||
|---|---|---|---|---|
| Over | Not Over | Basic Amount (a) | Additional Rate (b) | Of Excess Rate (c) |
| - | P250,000 | - | - | |
| P250,000 | P400,000 | - | 15% | P250,000 |
| P400,000 | P800,000 | P22,500 | 20% | P400,000 |
| P800,000 | P2,000,000 | P102,500 | 25% | P800,000 |
| P2,000,000 | P8,000,000 | P402,500 | 30% | P2,000,000 |
| P8,000,000 | - | P2,202,500 | 35% | P8,000,000 |
| Source: | BIR & | PinoyMoneyTalk.com | ||
INCOME TAX DUE = a + (b x c)
where: a = Basic Amount of Annual Income;
b = Additional Rate; and
c = Of the Excess over
So in the year 2023, an employee earning P300,000 annual salary will be paying income tax of:
- a = Basic Amount of Annual Income = Zero (0)
- b = Additional Rate = 15%
- c = Of the Excess over P250,000 = P50,000
- INCOME TAX DUE = 0 + (15% * P50,000) = P7,500
You’ll notice that the tax due of P7,500 is much lower than the income tax due of P10,000 during the implementation of TRAIN in 2018 to 2022. This is because the TRAIN law further reduced income tax rates from 2023 onwards.
Previously, the effective income tax rate charged to this taxpayer was 3.33%. From 2023 onwards, the new effective income tax rate, paying P7,500 income tax on P300,000 annual income, is down to just 2.5%.
How about the employee making P1 Million a year? From 2018 to 2022, that employee paid income tax in the amount of P190,000 during the implementation of TRAIN.
Using the new graduated income tax tables for 2023 onwards, the new income tax payable is as follows:
- a = Basic Amount of Annual Income = P102,500
- b = Additional Rate = 25%
- c = Of the Excess over P800,000 = P200,000
- INCOME TAX DUE = P102,500 + (25% * P200,000) = P152,500
Paying P152,500 income tax on P1 Million annual salary, this taxpayer is paying an effective income tax rate of 15.25%, lower than the 19% effective income tax rate during the implementation of TRAIN in 2018 to 2022.
Now you know how to compute your own income tax under TRAIN! Good job!
You must read these other awesome articles!
Sir, are the non taxable income like gsis/philhealth premiums and personal exemption still be considered in computing our taxable income? Or only the gross annual compensation will be ou basis in computing our tax due?
Will the deduction for GSIS, Philheath and Pag-ibig fund be deducted from Gross Pay to arrive the taxable income?
Meron na po bang new tax table for daily, weekly, bi-monthly and monthly computation of tax on compensation?
Are the OFWs included?
Good Day!
magtatanong lang po sana ako kung ibabawas ba yong GSIS, PHILHEALTH AT PAGIBIG deduction?
thank you po & God Bless…
opo. try niyo po mag visit sa site na ito:
http://birtaxcalculator.com/calculator.php
for professionals like doctors, are we still eligle to use the 40% optional deduction in lieu of itemized expenses? or will the new scheme be applied to gross income?
Is there a specific industries that is exempted to income tax?. We actually belong to BPO industry. It is true that we are not included on that exemption though were earning under the category of 250k or below annually?
Pano po yung mga employees like with dependents? Base on the new taxation mas tataas po ang tax namin. So we wont benefit from it. Its like we are the ones who will shoulder the taxes due feom other people. Like in may case i will be paying additional 5k.
As per BIR 2018 Withholding Tax Table, Gross Income is used to compute for the monthly withholding tax.. Deductions for GSIS, Phil health and Pag-ibig fund are not considered in the computation of the monthly withholding tax.
I don’t understand. Your table is based on the Gross Income. E, ano pa hong use nung mga personal exemption & dependents? elimated na po ba?
Thanks!
May deduction pa rin ba ang consultants na below 250,000 ang gross
if below 250,000 ang gross ng isang consultant may deduction pa rin ba! and ilang percent po ba ang computation.
sa unang bracket sya na percent mag babase.. ksi 250,000 up pa rin sya
Just asking if you know the answer for this. Our salary last January 11 2018, the company still deducted 30% on our withholding tax, katwiran cutoff is December 16 to 31st. Tama po ba un?
yup tama po un…kasi po earnings mo sya ng 2017..
sa amin wla na kmi deduction..ganyan din cut off namin..bka binulsa na yan hahah
Cash basis po ang tax, which means that since nabayaran po kayo ng January, applicable na TRAIN law sa inyo.
Mga government Job orders po ba may tax pa po?
Sir, i observed that you used 3 different column headings in the 3 Tax Tables shown above, as follows– “Annual Income”, “Gross Income Per Year”, “Income Per Year”. Shouldn’t the heading be “Net Taxable Income”?
no
on semi monthly tax table pag ang basic mo ay naging 12k includes overtime may tax na po ba?
wla po
ako JO ako. may tax kami ng 5% kasi daw professional kami.
tama
BAKIT MAY MGA FIXED VALUES PA NABABAYARAN ANG TAX PAYERS IBA PA YONG PERCENTAGE NA BABAYARAN KUNG SOBRA SA MAXIMUM KINITA. BAKIT DI NA LANG YONG PERCENTAGE. YON LANG PERCENTAGES AY MALAKI NA NA . WALA MAN LANG NAGREACT SA TRAIN TAX LAW NA GINAWA NILA
Hi! Just wondering if we are still required to use the ebir forms for this years filingnof annual ITR. I downloaded it and the tax rates were not yet updated. Theyre still using the old version with no change in tax rate as indicated by TRAIN law. Tnx
what forms should be filed if your a professional and opted for the graduated tax . do you still file the same 2551 M at 3% monthly and 1701 Q at 5% quarterly.
the filing for the 2017 ITR is the same as last year? meaning TRAIN law applies only for earnings 2018 and beyond? thanks
Single proprietor po ako at ng availed ng 8% income tax -train law.ask ko lng kung mag file p ba ako ng quarterly now? Tnx
Hi, I am a self-employed too and Im going to declare my income for the first time by jan or feb.. So technically only my income for the last quarter of this year will be declared. Please let me know if my computation is correct. I have Graduated OT -OSD.
Say for example monthly income of P75000 x 3 (oct-dec2018) =P225000
Since it’s below 250k lieu then it will be exempted from annual tax. Right?
Is personal exemptions 2305 honor if you’re 258k annual earner?
yes. its depend now with the bracket of tax your earning.
Hi po. Pag employed solo parent with 2 children, 1child is PWD, may tax incentive po ba yun? If so, how and where to file po? Salamat po.
Would like to inquire, last postings under this site was a Train Law sample computation on monthly basis.
With regards to Annual computation, does the 2 classification of compensation matters for annual computation. ( REGULAR AND SUPPLEMENTARY COMPENSATION)?
HI! I M LOOKING FOR THE TAX EXEMPTION FOR PWD DEPENDENTS HERE IN THE TRAIN LAW? i cant find it, hope to get an answer po
Does the gross of a consultant still have a deduction? Esp.when your are below 250.000 gross?
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Personal Income Tax Rate in Philippines is expected to reach 35.00 percent by the end of 2021, according to Trading Economics global macro models and analysts expectations. In the long-term, the Philippines Personal Income Tax Rate is projected to trend around 35.00 percent in 2022, according to our econometric models.
This income tax tables of very helpful and can be used as reference.
By the end of 2021, the personal income tax rate in the Philippines is predicted by Trading Economics global macro models and analysts to be 35.00 percent. the Philippines Personal Income Tax Rate will have a long-term trend of roughly 35.00 percent in 2022.
Rental Income Tax was not discussed but it was also affected by the Train Law. It is one of the factors causing fluctuations in rental rates, especially in rental hotspots. For instance, check out the price index of this Mandaluyong condo for rent: https://www.lamudi.com.ph/metro-manila/mandaluyong/condominium/rent/
Thanks for the information..
Your table is based on the Gross Income. E, ano pa hong use nung mga personal exemption & dependents
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