Annual net income for a self-employed Filipino.
Annual net income
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Income tax
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Contributions
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Expenses
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Who this is for
If you bill clients directly, run a small practice, or freelance under your own name, your take-home is nothing like a payslip. There is no employer withholding tax for you, no employer matching your social contributions, and your gross receipts have to absorb your expenses, your income tax, and the full cost of staying covered by SSS, PhilHealth, and Pag-IBIG. This tool nets all of that down to one annual figure and a monthly equivalent, so you can see what actually reaches your pocket from a given level of billings.
The two tax routes, and how the cheaper one is picked
A self-employed Filipino or professional generally chooses between two ways of being taxed. The first is the graduated income tax on your net profit, receipts less allowable expenses, layered on top of a 3 percent percentage tax charged on gross receipts. The second is a flat 8 percent option, which under the rules this calculator follows is applied to gross receipts after a PHP 250,000 reduction and replaces both the graduated tax and the percentage tax. Leave the tool on "cheaper of the two" and it computes both, then keeps whichever costs less. The graduated structure rises in bands, starting at zero up to PHP 250,000 of taxable income and climbing toward 35 percent at the top. These rates, the PHP 250,000 reduction, and the 3 percent figure are the assumptions built into the calculator; the structure is stable, but confirm the current numbers with the Bureau of Internal Revenue before you file.
PHP 1.2 million in receipts, year-end picture
Work through the default scenario. You bring in PHP 1,200,000 of gross receipts, claim PHP 300,000 of expenses, and keep the contributions box ticked. On the graduated route the tax on PHP 900,000 of net profit comes to PHP 127,500, and the 3 percent percentage tax on the full PHP 1,200,000 adds PHP 36,000, for PHP 163,500. The 8 percent route taxes PHP 950,000, the receipts after the PHP 250,000 reduction, giving PHP 76,000. The tool keeps the PHP 76,000, less than half the graduated bill here.
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That nets to PHP 698,600 a year, or about PHP 58,217 a month. The chart shows how the gross is whittled down: expenses take the largest slice, contributions the next, and tax the smallest in this case because the 8 percent option is so light at this income.
Paying your own contributions, with no employer half
As a voluntary member you carry the full contribution yourself. The tool takes a monthly basis of gross divided by twelve, so PHP 100,000 here, and applies the full rates. SSS uses the salary credit ceiling, so PHP 35,000 at 15 percent gives PHP 5,250 a month. PhilHealth charges 5 percent of basic up to its ceiling, PHP 5,000 a month at this level. Pag-IBIG caps the fund salary at PHP 10,000, so the 2 percent comes to PHP 200. That is PHP 10,450 a month, or PHP 125,400 a year. An employed person would split SSS and PhilHealth with an employer, so the voluntary route genuinely costs you more, which is the edge case worth remembering when you compare a freelance income to a salary. Treat these rates and ceilings as the calculator's modelled figures and verify them with SSS, PhilHealth, and Pag-IBIG, since each agency adjusts its schedule on its own cycle.
When does the 8 percent option disappear?
The flat 8 percent is only open to taxpayers whose gross receipts stay within the PHP 3,000,000 VAT registration threshold. Cross that line and you must register for VAT, the 8 percent election is no longer available, and this tool automatically switches you to the graduated route. If your billings are climbing toward PHP 3 million, that jump matters, because it changes both your tax route and your invoicing.
Are my SSS and PhilHealth payments deductible from tax here?
This calculator subtracts your contributions from receipts to reach net income, so they reduce what lands in your pocket. Under the graduated route, mandatory contributions are normally allowed as deductions in arriving at taxable income, but under the 8 percent option the tax is a flat charge on receipts and is not reduced by them. Because the structure differs by route, confirm the treatment for your situation with the BIR rather than assuming one rule covers both.