Taxable income = salary minus your SSS, PhilHealth and Pag-IBIG contributions, plus 13th-month pay and bonuses above ₱90,000.
Minimum wage earners pay no income tax on their minimum wage, holiday, overtime, night-shift and hazard pay.
This is an estimate based on published rates, not tax or financial advice. Your payslip or assessment may differ. We are an independent site, not affiliated with any government agency.
Graduated income tax rates (1 January 2023 onwards)
Annual taxable income
Tax
₱250,000 and below
0
₱250,000 – ₱400,000
15% of the excess over ₱250,000
₱400,000 – ₱800,000
₱22,500 + 20% of the excess over ₱400,000
₱800,000 – ₱2,000,000
₱102,500 + 25% of the excess over ₱800,000
₱2,000,000 – ₱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 ₱8,000,000
Worked example: employee on ₱40,000 a month
Monthly basic ₱40,000 plus 13th-month pay
Annual taxable income is ₱444,600: 12 months of salary minus contributions; the 13th-month pay is exempt. The tax is ₱22,500 + 20% of the excess over ₱400,000 = ₱31,420.
Income tax for 2026₱31,420₱2,618 a month
Taxable income
₱444,600
Effective rate on gross pay
6.04%
Freelancers and professionals
Self-employed taxpayers can choose between:
Graduated rates on net income – actual expenses, or the optional standard deduction of 40% of gross receipts – plus 3% percentage tax on gross receipts; or
8% of gross receipts above ₱250,000, replacing both, if receipts are ₱3 million or less and you are not VAT-registered.
Freelancer with ₱1,200,000 gross receipts
The 8% option costs ₱76,000, against ₱122,500 under graduated rates with the 40% standard deduction and percentage tax.
8% income tax option₱76,000replaces graduated rates and percentage tax
Graduated rates + 3% percentage tax
₱122,500
8% option saves you
₱46,500
Gross receipts
₱1,200,000
Optional standard deduction (40%)
−₱480,000
Income tax at graduated rates
₱86,500
Percentage tax (3% of receipts)
₱36,000
8% of receipts above ₱250,000
₱76,000
Questions people ask
How much is the income tax on ₱40,000 a month?
About ₱31,420 for the year. Taxable income is ₱444,600 after SSS, PhilHealth and Pag-IBIG; the 13th-month pay of ₱40,000 stays within the ₱90,000 exemption.
Who pays no income tax?
Anyone with taxable income of ₱250,000 or less a year, and minimum wage earners on their statutory minimum wage, holiday, overtime, night-shift and hazard pay.
Should a freelancer choose the 8% tax?
Often yes for service providers with few expenses. With ₱1.2 million of receipts, the 8% option costs ₱76,000 against ₱122,500 under graduated rates with the 40% standard deduction plus 3% percentage tax.
What is the 8% income tax option?
Self-employed individuals and professionals with gross receipts up to ₱3 million who are not VAT-registered can pay 8% of receipts above ₱250,000 instead of graduated income tax and percentage tax.
This is an estimate based on published rates, not tax or financial advice. Your payslip or assessment may differ. We are an independent site, not affiliated with any government agency. Read the full disclaimer.
