Project after-tax coupon income from a Retail Treasury Bond.
Total collected at maturity
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After-tax coupon, each
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Total after-tax coupons
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Total tax withheld
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What you actually collect after the 20 percent cut
A Retail Treasury Bond, or RTB, is the government's way of letting ordinary Filipinos lend to the national budget in small, accessible amounts rather than the large minimums the institutional market demands. You buy at face value, you receive a fixed coupon at set intervals, and at the end of the term the Bureau of the Treasury returns your principal in full. The headline coupon rate looks clean, but it is a gross number. Every coupon arrives lighter than the rate suggests because a final withholding tax is shaved off before the money reaches your account. This tool exists to show you the after-tax reality, not the brochure figure.
The rate this calculator applies is the 20 percent final withholding tax on interest, the same treatment that hits ordinary peso bank deposits. It is called final because the issuer or your broker remits it to the Bureau of Internal Revenue on your behalf, and you never report that interest again on your annual return. There is nothing for you to file and nothing more to pay. That simplicity is part of the appeal, but it also means the tax is invisible unless you do the arithmetic, which is exactly what the panel above does for each payment across the whole tenor.
Walking through a PHP 500,000 bond
Suppose you put PHP 500,000 into a five-year RTB paying a 6 percent coupon, with interest credited semi-annually. The annual interest is PHP 30,000, split into two payments of PHP 15,000 each. The 20 percent final tax takes PHP 3,000 from every payment, so PHP 12,000 actually lands in your account each half-year. Over five years that is ten coupon payments. Using the rates this calculator applies, here is how the cash stacks up.
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The chart above shows that final figure split into its parts, so you can see the principal you simply get back, the after-tax interest you earned, and the slice the government kept.
Notice that the bond never grew your money in a compounding sense here, because the tool models coupons as cash paid out, not reinvested. Your PHP 500,000 came back untouched, and the PHP 120,000 is pure income net of tax. If you reinvested each coupon into another instrument, your real return would climb above what this simple sum shows, but that depends on what you buy next.
Where the final tax bites hardest
The tax is a flat 20 percent regardless of how much you hold, so it does not get heavier as your investment grows, unlike graduated income tax on salary. What changes the total peso bite is the size of your holding and the coupon rate. A higher rate means larger coupons, which means more tax in absolute terms even though the percentage is fixed. One quiet advantage of an RTB over a savings account is that the principal you receive at maturity carries no tax at all, because returning your own money is not income. Only the interest is touched.
A common mistake is comparing an RTB coupon rate against a time-deposit rate without netting both for the same 20 percent. Since both face the same final tax, the comparison is fair once you apply it to each, but people often forget and treat the bond's gross coupon as if it were spendable in full. Always compare after-tax to after-tax. As with every figure here, confirm the current final-tax rate and any RTB-specific terms with the Bureau of Internal Revenue and the Bureau of the Treasury before you commit, since rates and tax rules are revised from time to time.
Who this tool is built for
This calculator suits the saver weighing a fresh RTB offering against a bank product, or anyone who already holds one and wants a clean picture of the cash to expect over the life of the bond. It assumes you hold to maturity and spend the coupons, which is the simplest and most common pattern for retail buyers. If you plan to sell on the secondary market before maturity, your proceeds depend on prevailing prices rather than this straight coupon math, and the result here will not capture that.
How does an RTB differ from a regular time deposit?
Both pay interest taxed at the same 20 percent final rate, but an RTB is a loan to the national government rather than to a bank, and it is generally regarded as lower in credit risk for that reason. RTBs also trade on a secondary market, so you can sell before maturity, whereas a time deposit usually locks you in or charges a penalty for early withdrawal. Coupon frequency on RTBs is commonly quarterly or semi-annual, giving you a steadier income stream than a single lump payout.
Can the 20 percent final tax ever be reduced or refunded?
For an ordinary resident retail investor, no. The 20 percent is final and deducted at source, with nothing to reclaim and nothing extra to declare. Certain tax-exempt entities or specific bond programs may carry different treatment, and the rules can change, so verify your own status and the terms of the particular issue with the Bureau of Internal Revenue rather than assuming the standard rate always applies.
What if I sell the bond before it matures?
This tool models a hold-to-maturity buyer, so it does not price an early sale. If you sell on the secondary market, you receive the market price, which moves with interest rates and can be above or below face value. Any accrued interest and the tax on it follow separate rules, so treat the figures here as the best case where you simply collect every coupon and your principal at the end.