How do I compute income tax in the Philippines?

Add your yearly pay, subtract exempt items such as mandatory SSS, PhilHealth and Pag-IBIG contributions and the tax-exempt part of bonuses, then apply the graduated tax table to the taxable income that remains.

What is the tax-free income limit?

Under the TRAIN rates that apply from 2023, the first ₱250,000 of yearly taxable income is not taxed.

Is the 13th month pay taxable?

It is exempt up to ₱90,000 together with other bonuses and benefits for the year. Only the amount above that limit is added to your taxable income.

What are the income tax rates for 2026?

The graduated rates are 0 percent up to ₱250,000, then 15, 20, 25, 30 and 35 percent on higher slices. The table in this guide shows each band.

What is the 8 percent income tax option?

Self-employed individuals and professionals with gross receipts within the allowed limit can choose an 8 percent rate on gross receipts instead of the graduated rates. Check the BIR rules for how the first ₱250,000 is treated before you choose.

Do I need to file my own income tax return?

Many employees with one employer do not file their own return because the employer files the year-end adjustment. Freelancers, mixed-income earners and people with several employers usually file themselves. Check the BIR rules for your case.

How to Compute Income Tax in the Philippines (2026 Guide With Free Calculator)

The Philippine Income Tax Table (TRAIN)

Starting in 2023, the TRAIN law's lower graduated rates apply to individual taxpayers. The rates apply to each slice of yearly taxable income, not to the whole amount at once.

Philippine income tax rates by income band — Each slice of your taxable income is taxed at its own rate

Yearly taxable income	Tax
Up to ₱250,000	0%
₱250,001 to ₱400,000	15% of the excess over ₱250,000
₱400,001 to ₱800,000	₱22,500 plus 20% of the excess over ₱400,000
₱800,001 to ₱2,000,000	₱102,500 plus 25% of the excess over ₱800,000
₱2,000,001 to ₱8,000,000	₱402,500 plus 30% of the excess over ₱2,000,000
Over ₱8,000,000	₱2,202,500 plus 35% of the excess over ₱8,000,000

People working with a laptop and papers at a table — Gather your payslips and your year-end form before you compute your tax.

How to Compute Your Tax in 4 Steps

Four steps to compute income tax in the Philippines — A worked example is in the steps image above

Add your yearly pay. Include basic salary, your 13th month pay and any taxable extras such as commissions.
Subtract exempt items. Take out your SSS, PhilHealth and Pag-IBIG contributions and the part of your bonuses within the ₱90,000 exemption.
Find your taxable income. This is what remains after step 2.
Apply the table. Use the bands above to compute the tax on each slice.

Worked example: an employee earning ₱30,000 a month with a ₱30,000 13th month pay has gross pay of ₱390,000. After about ₱29,400 in contributions and the exempt bonus of ₱30,000, taxable income is about ₱330,600. The tax is 15% of the amount above ₱250,000, which is about ₱12,090 for the year. A higher earner of ₱60,000 a month with a ₱60,000 bonus lands around ₱78,000 using the same steps.

For month-by-month figures, use our take-home pay calculator, and for your bonus see the 13th month pay calculator. The full version of this tool is the income tax calculator.

Which Rules Apply to You?

EmployeeFreelancerMixed income

Taxed through your payroll

Your employer withholds tax every payday and files the year-end adjustment. Check your payslips against this guide and look at your year-end certificate.

Graduated rates or 8 percent

Self-employed people can often choose between graduated rates and an 8 percent rate on gross receipts. Compare both with our freelancer tax calculator before you choose.

Salary plus business

If you have a job and a side business, your salary is taxed through payroll and your business income is handled separately. Check the BIR rules for the 8 percent option.

Compare the options with the freelancer tax calculator, and see our 13th month pay plan for Christmas to plan the bonus.

Documents to Keep

Your TIN and a valid ID.
Your year-end certificate from your employer (BIR Form 2316).
Payslips showing contributions and tax withheld.
Receipts and records if you earn from a side business.
Proof of any other income, such as interest or a second employer.

Common Questions

Do I pay tax on my 13th month pay?

Only the part above the ₱90,000 exemption for the year, counted together with other bonuses and benefits.

What if my employer withheld too much?

The year-end adjustment settles the difference, and any excess is usually refunded or credited. Enter your withheld tax in the calculator to see the gap.

Does this include other income?

No. Interest, rental income and business income have their own rules. Use this guide for employment income and check the BIR for the rest.

Sources

TRAIN rates from the Philippine Information Agency and guidance on the 8 percent option from Jur.ph. This is general information, not tax advice. Confirm current rules with the BIR or a tax professional.