Annual BIR graduated income tax on your taxable income.
Annual income tax
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Effective rate
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Monthly equivalent
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Your breakdown
Updates live as you type
Item
Amount
Worked example
Suppose your annual taxable income, after mandatory contributions and the exempt 13th-month slice, is
600,000 pesos. The first 250,000 is exempt, so no tax is due on it. The portion from 250,000 to 400,000,
a band of 150,000, is taxed at 15%, which is 22,500. The portion from 400,000 to 600,000, a band of
200,000, is taxed at 20%, which is 40,000. Nothing reaches the 25% band that starts at 800,000. Total tax
is 22,500 plus 40,000, or 62,500 for the year, about 5,208 a month. Because the first quarter-million is
free and only part of the income hits the 20% band, the effective rate is just 10.4%, well below the 20%
top band reached.
Band
Rate
Tax (PHP)
First ₱250,000
0%
₱0
₱250,000 to ₱400,000
15%
₱22,500
₱400,000 to ₱600,000
20%
₱40,000
Total tax
10.4% effective
₱62,500
How it is calculated
Philippine income tax under the TRAIN graduated schedule is a marginal system, so each band only taxes the
income that falls inside it, not your whole salary. The calculator walks the brackets from the bottom: the
first 250,000 pesos a year is exempt, then 15% applies up to 400,000, 20% up to 800,000, 25% up to two
million, 30% up to eight million, and 35% above that. It adds the tax from each band the income reaches and
stops at your level. Dividing the total by your taxable income gives the effective rate, which is always
lower than the top band because the lower bands are cheaper or free. Note this tool taxes a figure you have
already reduced to taxable income. To get there from a gross salary you first deduct SSS, PhilHealth, and
Pag-IBIG and the exempt portion of 13th-month pay, which the take-home calculator handles end to end.
Frequently asked questions
How much income is tax-free in the Philippines?
The first 250,000 pesos of annual taxable income is exempt under the TRAIN graduated schedule. Income above that is taxed in bands of 15%, 20%, 25%, 30%, and 35%. Taxable income is your gross compensation less mandatory contributions and the exempt portion of 13th-month pay and other benefits.
What is the difference between taxable income and gross salary in the Philippines?
Gross salary is what your employer pays before any deductions. Taxable income is what remains after subtracting mandatory SSS, PhilHealth, and Pag-IBIG contributions plus the tax-exempt portion of your 13th-month pay and other benefits, which is capped at PHP 90,000. Only taxable income is run through the TRAIN graduated brackets, so the same gross salary can result in different tax bills depending on your contributions and benefits.
What is the top income tax rate in the Philippines and at what income does it apply?
The top rate of 35% applies to taxable income above PHP 8,000,000 per year under the TRAIN schedule in effect from 2023 onward. Very few individual earners reach that level. The 30% band covers income from PHP 2,000,000 to PHP 8,000,000, and the 25% band covers PHP 800,000 to PHP 2,000,000, which is where many mid-to-senior professionals land.
Why is my effective tax rate lower than the top bracket I reach?
Because Philippine income tax is marginal, meaning each rate applies only to the slice of income that falls inside that band, not to your entire income. If your taxable income reaches the 20% band, only the portion above PHP 400,000 and up to PHP 800,000 is taxed at 20%. The lower slices are taxed at 0%, 15%, and so on. The effective rate is always lower than the top bracket rate for this reason.