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Philippines Income Tax Calculator (Train Law)

Compute Philippine income tax using the 2023 TRAIN Law brackets. Supports monthly or annual salary input with optional SSS, PhilHealth, and Pag-IBIG deductions.

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Inputs

Gross Income

Income Frequency

Deduct Mandatory Contributions (SSS, PhilHealth, Pag-IBIG)

Annual Income Tax

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Get a plain-English breakdown of your result with practical next steps.

Annual Income Tax—

The formula

How the
result is
computed.

How the Philippines Income Tax Calculator (TRAIN Law) Works

Republic Act No. 10963, commonly known as the Tax Reform for Acceleration and Inclusion (TRAIN) Law, restructured the Philippine personal income tax system effective January 1, 2018. A second round of rate reductions took effect on January 1, 2023, lowering bracket rates to deliver greater take-home pay to lower- and middle-income earners. This calculator applies the 2023-onwards graduated tax table as published by the Bureau of Internal Revenue (BIR) and codified in Republic Act No. 10963 (TRAIN Law).

The TRAIN Law Tax Brackets (2023 Onwards)

Annual income tax T(I) follows a graduated rate schedule that applies progressively higher marginal rates only to the portion of income above each threshold. The six brackets are:

₱0 to ₱250,000: Tax = ₱0 — fully exempt from income tax.
₱250,001 to ₱400,000: Tax = 15% × (I − ₱250,000).
₱400,001 to ₱800,000: Tax = ₱22,500 + 20% × (I − ₱400,000).
₱800,001 to ₱2,000,000: Tax = ₱102,500 + 25% × (I − ₱800,000).
₱2,000,001 to ₱8,000,000: Tax = ₱402,500 + 30% × (I − ₱2,000,000).
Over ₱8,000,000: Tax = ₱2,202,500 + 35% × (I − ₱8,000,000).

The cumulative fixed amounts (₱22,500, ₱102,500, ₱402,500, ₱2,202,500) represent the total tax already owed on income up to each bracket's lower bound, ensuring no discontinuity as income crosses a threshold.

Step-by-Step Calculation Method

Step 1: Determine Gross Taxable Income

Enter the total gross compensation income received before any deductions. When the monthly frequency is selected, the calculator multiplies the figure by 12 to produce an annual basis for accurate bracket placement.

Step 2: Subtract Mandatory Government Contributions (Optional)

Under the National Internal Revenue Code as amended by TRAIN, mandatory employee contributions to SSS, PhilHealth, and Pag-IBIG are excluded from gross taxable income. When this option is enabled, the calculator deducts the following annual amounts:

SSS: 5% of the Monthly Salary Credit (MSC), capped at an MSC of ₱35,000 — maximum employee deduction of ₱1,750 per month (₱21,000 per year), per the SSS Schedule of Contributions.
PhilHealth: 2.5% of basic monthly salary, subject to a salary floor of ₱10,000 (minimum contribution ₱250/month) and a salary ceiling of ₱100,000 (maximum ₱2,500/month), per the PhilHealth Premium Contribution Schedule.
Pag-IBIG: 2% of monthly compensation, capped at ₱200 per month (₱2,400 per year), per the Pag-IBIG Fund Membership Contribution schedule.

Step 3: Apply the Graduated Tax Formula

The calculator identifies which bracket the net taxable income falls into, takes the pre-computed cumulative tax for all lower brackets, then applies the marginal rate only to the excess above that bracket's lower threshold. The result is the annual income tax due.

Worked Examples

Example 1: Monthly Salary of ₱35,000 with Mandatory Deductions

Annual gross income = ₱35,000 × 12 = ₱420,000. Mandatory deductions: SSS ₱21,000 + PhilHealth ₱10,500 (2.5% × ₱35,000 × 12) + Pag-IBIG ₱2,400 = ₱33,900. Net taxable income = ₱420,000 − ₱33,900 = ₱386,100. Bracket: ₱250,001–₱400,000. Tax = 15% × (₱386,100 − ₱250,000) = 15% × ₱136,100 = ₱20,415 annually, or about ₱1,701 per month. The effective tax rate on gross income is just 4.86%.

Example 2: Annual Income of ₱1,200,000 without Deductions

Bracket: ₱800,001–₱2,000,000. Tax = ₱102,500 + 25% × (₱1,200,000 − ₱800,000) = ₱102,500 + ₱100,000 = ₱202,500 annually. Effective tax rate = ₱202,500 ÷ ₱1,200,000 = 16.88%, well below the 25% marginal rate, illustrating how the graduated structure protects lower portions of income.

Why Mandatory Contributions Reduce Tax

Deducting SSS, PhilHealth, and Pag-IBIG contributions before applying BIR brackets can meaningfully shrink an employee's annual tax bill. For a ₱35,000/month earner, total monthly contributions reach approximately ₱2,825 (₱1,750 SSS + ₱875 PhilHealth + ₱200 Pag-IBIG), reducing annual taxable income by ₱33,900 and saving roughly ₱5,085 in income tax each year. Always verify current contribution schedules with the respective agencies, as rates are adjusted periodically.

Reference

Frequently asked questions

What is the TRAIN Law and how does it change income tax in the Philippines?

The TRAIN Law (Republic Act No. 10963), effective January 1, 2018, overhauled the Philippine income tax system by raising the annual tax-exempt threshold from ₱60,000 to ₱250,000. A second phase took effect January 1, 2023, reducing marginal rates in the two lowest taxable brackets. Most Filipino employees earning ₱250,000 or below now pay zero income tax, while higher earners benefit from lower effective rates than under the old pre-TRAIN schedule.

Who is exempt from income tax under the TRAIN Law?

All individual taxpayers — salaried employees, self-employed individuals, and professionals — with annual taxable income of ₱250,000 or less owe zero income tax under the TRAIN Law. For a salaried worker, this exemption corresponds to a gross monthly salary of roughly ₱20,833 before mandatory contribution deductions. Income above ₱250,000 is taxed only on the excess amount, starting at a 15% marginal rate, keeping effective tax rates low for entry-level earners.

How do SSS, PhilHealth, and Pag-IBIG contributions reduce my income tax in the Philippines?

Mandatory employee contributions to SSS, PhilHealth, and Pag-IBIG are classified as exclusions from gross taxable income under the NIRC as amended by TRAIN. Subtracting these before applying BIR tax brackets lowers the taxable base directly. A ₱35,000/month earner deducts approximately ₱2,825/month (₱1,750 SSS + ₱875 PhilHealth + ₱200 Pag-IBIG), reducing annual taxable income by ₱33,900 and saving about ₱5,085 in income tax each year.

How do I calculate my monthly income tax in the Philippines step by step?

To calculate monthly income tax: (1) Multiply monthly salary by 12 to get annual income. (2) Subtract annual mandatory contributions if applicable. (3) Apply the TRAIN Law bracket formula — for example, annual income of ₱480,000 gives Tax = ₱22,500 + 20% × (₱480,000 − ₱400,000) = ₱22,500 + ₱16,000 = ₱38,500/year. (4) Divide by 12 to get the monthly withholding of approximately ₱3,208. The BIR publishes withholding tax tables that employers use to approximate this calculation per payroll period.

What is the difference between the 2018 and 2023 TRAIN Law tax tables?

The TRAIN Law was structured in two phases. The 2018 tax table set a 20% rate for income between ₱250,001 and ₱400,000, and 25% for ₱400,001 to ₱800,000. The 2023 revised table reduced those to 15% and 20% respectively, while the top rate of 35% on income above ₱8,000,000 remained unchanged. The 2023 reductions were designed to offset cumulative inflation since the law's enactment and deliver additional take-home pay to lower- and middle-income Filipino workers.

Does the TRAIN Law income tax calculator apply to self-employed individuals and freelancers?

This calculator is built for compensation income — salaries and wages received by employees. Self-employed individuals, freelancers, and professionals in the Philippines have an added option under TRAIN: they may elect an 8% flat tax on gross sales or receipts exceeding ₱250,000 annually, provided total revenue stays at or below ₱3,000,000. Those exceeding ₱3,000,000, or those who do not elect the 8% option, apply the same graduated brackets to net income after allowable business deductions.