Every taxpayer in the Philippines, especially the employees, should be updated with the Income Tax Table for 2018. It serves as the new basis for the computation of monthly income tax that should be withheld by the employers.
The new income tax table is one of the changes in taxation in the country based on the Republic Act No. 10963, known as the Tax Reform for Acceleration and Inclusion (TRAIN) Act. This Act has been signed and approved by President Rodrigo Duterte on December 17, 2018.
On the 1st of January this year 2018, the TRAIN Law began its implementation. Surely, you have noticed its effect in your monthly pay slip and several certain products in the market. However, let’s cover up first the new income tax rates.
There are two income tax tables included in the TRAIN Law in two different time schedules. The first one is effective this year up to the year 2022 and the second one is effective in the year 2023 and onward.
Income Tax Table 2018
This income tax table is effective January 1, 2018 up until December 31, 2022.
| Gross Annual Income | Income Tax Rate |
|---|---|
| Not over ₱250,000 | 0% |
| Over ₱250,000 but not over ₱400,000 | 20% of the excess over ₱250,000 |
| Over ₱400,000 but not over ₱800,000 | ₱30,000 + 25% of the excess over ₱400,000 |
| Over ₱800,000 but not over ₱2,000,000 | ₱130,000 + 30% of the excess over ₱800,000 |
| Over ₱2,000,000 but not over ₱8,000,000 | ₱490,000 + 32% of the excess over ₱2,000,000 |
| Over ₱8,000,000 | ₱2,410,000 + 35% of the excess over ₱8,000,0000 |
Employees who are receiving yearly income worth ₱250,000 and below is exempted in paying an income tax. Greater number of employees fall into this category. Thus, they can bring home the amount that should have been withheld by the employers before.
Those who are receiving an annual salary more than ₱250,000 up to ₱400,000, the income tax rate would be 20% of the excess over ₱250,000.
Those who are earning above ₱400,000 up to ₱800,000 per year shall be charged an income tax of ₱30,000 plus 25% of the excess over ₱400,000.
Moreover, if your salary is more than ₱800,000 up to ₱2,000,000 every year, your income tax would be ₱130,000 plus 30% of the excess over ₱800,000.
If you are generating income above ₱2,000,000 up to ₱8,000,000 per year, your annual income tax would be ₱490,000 plus 32% of the excess over ₱2,000,000.
Employees who are receiving salaries more than ₱8,000,000 should pay an income tax of ₱2,410,000 plus 35% of the excess over ₱8,000,000.
Income Tax Table 2023
This income tax table is effective January 1, 2023 and onwards.
| Gross Annual Income | Income Tax Rate |
|---|---|
| Not over ₱250,000 | 0% |
| Over ₱250,000 but not over ₱400,000 | 15% of the excess over ₱250,000 |
| Over ₱400,000 but not over ₱800,000 | ₱22,500 + 20% of the excess over ₱400,000 |
| Over ₱800,000 but not over ₱2,000,000 | ₱102,500 + 25% of the excess over ₱800,000 |
| Over ₱2,000,000 but not over ₱8,000,000 | ₱402,500 + 30% of the excess over ₱2,000,000 |
| Over ₱8,000,000 | ₱2,202,500 + 35% of the excess over ₱8,000,0000 |
On the year 2023, employees who are receiving an annual salary worth ₱250,000 and below is still exempted in paying an income tax.
On the other hand, employees who are earning over ₱250,000 up to ₱800,000 per year, from the previous tax rate of 20% of the excess over ₱250,000, its down to 15%. There shall be lower income tax charges in year 2023 and onward.
If you are earning more than ₱400,000 up to ₱800,000 per year, your income tax would be ₱22,500 plus 20% of the excess over ₱400,000.
Those receiving salaries above ₱800,000 up to ₱2,000,000 every year shall pay an income tax of ₱102,500 plus 25% of the excess over ₱800,0000.
Furthermore, if you are receiving over ₱2,000,000 but not over ₱8,000,000 annually, you shall be charged ₱402,500 plus 30% of the excess over ₱2,000,0000.
Lastly, if you are earning more than ₱8,000,000, your annual income tax is calculated as ₱2,202,500 plus 35% of the excess over ₱8,000,0000.
That was the New Income Tax Table for 2018 and in the coming years. Please share.
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