Metro Manila, Philippines — People who earn purely through compensation may anticipate higher take-home pay next year, the Bureau of Internal Revenue (BIR) announced on Friday.
Those earning up to ₱250,000 are still exempt from paying personal income tax, while those earning from ₱251,000 to ₱8,000,000 will have lower tax rates ranging from 15% to 30% by 2023.
“With the said reduction in the annual income tax rates, individuals earning purely compensation Income will have lower withholding tax deductions from their monthly salary, thereby increasing their take-home pay,” said BIR chief Romeo D. Lumagui, Jr.
However, those earning over ₱8,000,000 will have a 35% increase of tax rate from the previous 32%.
Under the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the tax rate adjustment will take effect on Jan. 1.
Employers will refer to the revised withholding tax table for the computation of withholding taxes on compensation income of their employees:
If Taxable Income Is – Tax Due is
Not over ₱250,000.00 – 0%
Over ₱250,000.00 but not over ₱400,000.00 – 15% of the excess over ₱250,000.00
Over ₱400,000.00 but not over ₱800,000.00 – ₱22,500.00 + 20% of the excess over ₱400,000.00
Over ₱800,000.00 but not over ₱2,000,000.00 – ₱102,500.00 + 25% of the excess over ₱800,000.00
Over ₱2,000,000.00 but not over ₱8,000,000.00 – ₱402,500.00 +30% of the excess over ₱2,000,000.00
Over ₱8,000,000.00 – ₱2,202,500.00 +35% of the excess ₱8,000,000.00