New BIR Withholding Tax Rules for Professionals and Self-Employed


How much is the new withholding tax rate on incomes of self-employed and professionals and how to compute the income tax that they are supposed to pay?

We explain the answers in this easy-to-read guide below.

Under the TRAIN law or Republic Act (RA) No. 10963, self-employed individuals and professionals will be subjected to the following tax regulations:

If annual gross sales or income is P3 Million or below

Self-employed and professionals with annual gross sales or income receipts not exceeding the VAT threshold of P3 Million have the option to choose between these two tax rates:

  1. Eight percent (8%) of gross sales or receipts and other income, in excess of P250,000 instead of the graduated income tax rates and percentage tax (no option to register for VAT); OR
  2. Graduated income tax rates of 0% to 35% on net taxable income, plus 3% percentage tax (No change in computation of Net Taxable Business Income)

The graduated income tax rates are the same as the Personal Income Tax Rates and Tax Tables here and summarized below.

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

8% Withholding Tax for Self-employed and Professionals

The 8% withholding tax rate replaces the two-tier rate of 10% (for self-employed and professionals earning less than P720,000 income every year) or 15% (for those earning more than P720,000 per year).

The 8% withholding rate is applied on the income, regardless of the amount, and is reiterated in BIR’s Revenue Memorandum Circular No. 1-2018 issued on January 4, 2018 which states that:

“Change in the Creditable Withholding Tax Rate on lncome Payments to Self-employed lndividuals or Professionals

The following lncome Payments to Self-employed lndividuals or Professionals shall be subject to Eight Percent (8%):

1. Professional fees, talent fees, commissions, etc. for services rendered by individuals;

2. lncome distribution to beneficiaries of Estates and Trusts;

3. lncome Payment to certain brokers and agents;

4. lncome Payments to partners of general professional partnership;

5. Professional fees paid to medical practitioners; and

6. Commission of independent and/or exclusive sales representatives, and marketing agents of companies.”

If annual gross sales or income is above P3 Million

However, the tax rule is simpler and more straightforward for self-employed and professionals receiving annual gross sales or receipts exceeding the P3 Million VAT threshold. If their gross income or sales receipts total more than P3 million, they do not have a choice and they must follow the graduated income tax rates (as shown above) on the net taxable income, plus VAT.


(UPDATE Feb. 2018): The BIR released Revenue Regulation RR 8-2018 which details the implementation of income taxes under the TRAIN law. Click here to see a sample computation, as explained by BIR, of how income taxes are calculated for Professionals and Self-Employed individuals: BIR Sample Computation: Income Tax for Self-Employed and Professionals under TRAIN

(UPDATE May 2018): The BIR has released a new Revenue Memorandum Order covering the availment of 8% tax rate for self-employed and professionals. Read about it here: 8% BIR Tax Rule for Self-Employed and Professionals (RMO 23-2018)

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


33 thoughts on “New BIR Withholding Tax Rules for Professionals and Self-Employed”

  1. Just want to ask kung ang minimum wage earner po with allowance ay babawasan ba ng WHT tax? Below is the sample computation

    1.Average Monthly Pay 17,609.13
    2. Night Differential pay –
    3. 5 days Incentive Pay 223.75
    4. Overtime 11,130.83
    5. Uniform Allowance 100.00
    ALLOWANCE 10,000.00
    A. AMOUNT TO GUARD 39,063.71
    Less: Govt. Mandatory Deduction
    7. SSS – Employee’s share 800.00
    8. Philhealth – Employee’s share 242.13
    9. Pag-ibig 100.00
    B. TOTAL DEDUCTION (1,142.13)
    C. TOTAL AMOUNT TO GUARD 37,921.58

  2. Ask ko lng po if single prop den ung annual income is less than 250k, do i need to file my itr? Den im paying my quarterly percentage tax na 3 percent.

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