Income Tax Philippines
Learn how to calculate the Finance Income Tax in the Philippines. Understand tax brackets, deductions, and exemptions, and use our step-by-step guide to maximiz...
📊 What Is Finance Income Tax in the Philippines?
Income tax is a mandatory government charge imposed on individuals and businesses based on their earnings. The Bureau of Internal Revenue (BIR) manages taxation in the Philippines, and taxes fund government services and infrastructure.
- Paid annually, quarterly, or monthly depending on status
- Applies to all residents earning income in the country
- Different rates for individuals and corporations
📐 This year Philippine Income Tax Rates
Individuals (This year)
- ₱0 – ₱250,000: 0%
- ₱250,001 – ₱400,000: 20% of excess over ₱250,000
- ₱400,001 – ₱800,000: ₱30,000 + 25% of excess over ₱400,000
- ₱800,001 – ₱2,000,000: ₱130,000 + 30% of excess over ₱800,000
- ₱2,000,001 – ₱8,000,000: ₱490,000 + 32% of excess over ₱2,000,000
- Over ₱8,000,000: ₱2,410,000 + 35% of excess over ₱8,000,000
Corporations
- Regular Corporate Income Tax (RCIT): 25% of taxable net income
- Minimum Corporate Income Tax (MCIT): 1% of gross income
💼 Who Must Pay Income Tax?
Individuals
Understanding your Finance Income Tax in the Philippines is essential for both employees and business owners. The Philippine government requires residents to pay taxes on their earnings based on progressive tax rates that change periodically. Knowing how to compute your income tax correctly ensures compliance, avoids penalties, and helps with financial planning. In 2025, the tax system is straightforward yet requires attention to detail when factoring in exemptions, deductions, and bonuses. This guide explains the current Philippine income tax rates, provides step-by-step calculation examples, and introduces online tools to make your life easier. Whether you are a salaried employee, a freelancer, or a business owner, mastering your Finance Income Tax The Philippines will help you maximize your take-home pay and properly plan your finances.
- Employees earning above the minimum threshold
- Self-employed professionals
- Freelancers and contractors
Corporations
- Domestic and foreign corporations with Philippine income
- Partnerships with net taxable profit
📊 How to Calculate Your Income Tax
Step-by-Step Example
Suppose you are an individual earning ₱600,000/year.
First ₱400,000: ₱30,000 + 25% of excess over ₱400,000
Excess: ₱600,000 – ₱400,000 = ₱200,000
Tax: ₱30,000 + (25% × ₱200,000) = ₱30,000 + ₱50,000 = ₱80,000
Common Deductions & Exemptions
- Personal exemption: ₱50,000
- Additional exemptions for dependents: ₱25,000 per qualified dependent
- SSS, PhilHealth, Pag-IBIG contributions
🛠️ Online Tools for Income Tax Calculation
- BIR eFPS portal
- Official BIR Tax Calculator
- Finance websites offering interactive calculators
Frequently Asked Questions - Income Tax Philippines:
What is Finance Income Tax Philippines?
It is the tax imposed by the Philippine government on individuals and corporations based on their income.
Who must pay income tax in the Philippines?
Individuals earning above the threshold and corporations operating in the Philippines must pay income tax.
What are the 2025 Philippine income tax rates for individuals?
Rates start from 0% for income up to ₱250,000 and go up to 35% for income over ₱8,000,000.
Are there exemptions for dependents?
Yes, taxpayers can claim additional exemptions of ₱25,000 per qualified dependent.
How do I calculate my annual income tax?
Subtract deductions and exemptions from your total income, then apply the progressive tax rates.
Is corporate tax the same as individual tax?
No, corporate tax is 25% of net taxable income or 1% minimum on gross income, depending on type.
Can I use online tools for Philippine tax calculation?
Yes, BIR provides calculators and there are many finance websites with interactive tools.
Do bonuses count as taxable income?
Yes, bonuses, commissions, and allowances are part of taxable income.
What contributions reduce taxable income?
SSS, PhilHealth, and Pag-IBIG contributions can reduce taxable income.
When is income tax filed in the Philippines?
Individuals usually file annually, while corporations file quarterly and annually depending on BIR rules.
