2019 TRAIN Law Tax Calculator
Calculate your income tax under the Tax Reform for Acceleration and Inclusion (TRAIN) Law of 2019
Your 2019 TRAIN Law Tax Calculation
Comprehensive Guide to the 2019 TRAIN Law Tax Calculator
The Tax Reform for Acceleration and Inclusion (TRAIN) Law, officially known as Republic Act No. 10963, was implemented in the Philippines starting January 1, 2018, with full effect by 2019. This landmark tax reform package aimed to create a simpler, fairer, and more efficient tax system that would promote investment, job creation, and poverty reduction.
Key Features of the 2019 TRAIN Law
- Lower Personal Income Tax Rates – The TRAIN Law reduced personal income tax rates for most taxpayers, with those earning ₱250,000 or less annually becoming exempt from income tax.
- Simplified Tax Tables – The progressive tax rates were simplified from 7 brackets to 6 brackets with lower rates.
- Increased Personal Exemptions – Personal exemptions were increased to ₱50,000 for single individuals and ₱100,000 for the head of the family and married individuals.
- Additional Exemptions for Dependents – Each qualified dependent child (up to 4) received an additional ₱25,000 exemption.
- Optional Standard Deduction – Taxpayers could choose between itemized deductions or a standard deduction of up to 40% of gross income (capped at ₱250,000 for self-employed and professionals).
2019 TRAIN Law Tax Table
The following table shows the progressive tax rates under the TRAIN Law for 2019:
| Taxable Income Bracket (₱) | Tax Rate | Tax Due Calculation |
|---|---|---|
| Up to 250,000 | 0% | ₱0 |
| Over 250,000 to 400,000 | 20% | ₱0 + 20% of excess over ₱250,000 |
| Over 400,000 to 800,000 | 25% | ₱30,000 + 25% of excess over ₱400,000 |
| Over 800,000 to 2,000,000 | 30% | ₱130,000 + 30% of excess over ₱800,000 |
| Over 2,000,000 to 8,000,000 | 32% | ₱490,000 + 32% of excess over ₱2,000,000 |
| Over 8,000,000 | 35% | ₱2,410,000 + 35% of excess over ₱8,000,000 |
Comparison: Old vs. New Tax System (2019)
The following comparison shows how the TRAIN Law affected different income levels:
| Annual Income (₱) | Old System Tax (₱) | TRAIN Law Tax (₱) | Tax Savings (₱) | Savings % |
|---|---|---|---|---|
| 250,000 | 12,500 | 0 | 12,500 | 100% |
| 400,000 | 50,000 | 30,000 | 20,000 | 40% |
| 600,000 | 125,000 | 85,000 | 40,000 | 32% |
| 1,000,000 | 250,000 | 170,000 | 80,000 | 32% |
| 2,000,000 | 625,000 | 490,000 | 135,000 | 21.6% |
| 5,000,000 | 1,875,000 | 1,410,000 | 465,000 | 24.8% |
Who Benefits Most from the TRAIN Law?
- Minimum Wage Earners – Those earning the minimum wage (₱10,000-₱15,000/month) were completely exempt from income tax under TRAIN, whereas they paid some tax under the old system.
- Lower Middle Class – Individuals earning between ₱250,000 to ₱800,000 annually saw significant tax reductions, with savings ranging from 20% to 40%.
- Middle Income Earners – Those earning between ₱800,000 to ₱2,000,000 also benefited from lower tax rates, though the percentage savings were slightly less than for lower income brackets.
- Self-Employed and Professionals – The optional standard deduction (40% of gross income) simplified tax compliance for many small business owners and freelancers.
Common Deductions Under TRAIN Law
While the TRAIN Law simplified tax calculations, certain deductions remained important for accurate tax computation:
- Premium Payments on Health and/or Hospitalization Insurance – Up to ₱2,400 annually for individuals and ₱24,000 for family coverage.
- SSS, GSIS, Pag-IBIG, and PHIC Contributions – Mandatory contributions to these government agencies are deductible from gross income.
- Retirement Benefits – Contributions to retirement plans approved by the BIR are deductible up to certain limits.
- Educational Expenses – For self-employed and professionals, certain educational expenses may be deductible.
Frequently Asked Questions About the 2019 TRAIN Law
1. Who is considered a “qualified dependent” under TRAIN?
A qualified dependent is a legitimate, legally adopted, or illegitimate child who is:
- Below 21 years old, or
- Regardless of age, if incapable of self-support because of mental or physical defect
- Living with the taxpayer (certain exceptions apply for students)
2. Can I still use itemized deductions under TRAIN?
Yes, taxpayers have the option to choose between:
- Optional Standard Deduction (OSD) – 40% of gross income (maximum of ₱250,000 for self-employed and professionals)
- Itemized Deductions – Actual expenses with proper receipts and documentation
Most taxpayers find the OSD more beneficial unless they have very high deductible expenses.
3. How does TRAIN affect bonuses and 13th month pay?
Under TRAIN, bonuses and 13th month pay up to ₱90,000 are exempt from income tax, provided:
- The total amount does not exceed ₱90,000
- It is received by rank-and-file employees (not managerial)
- It is paid in addition to the regular compensation
4. What about fringe benefits?
The TRAIN Law maintained most fringe benefit tax (FBT) rules but adjusted some thresholds:
- De minimis benefits (e.g., rice subsidy, uniforms) up to ₱90,000 annually are tax-exempt
- Housing benefit for employees is tax-exempt up to ₱3,000/month
- Medical cash allowance to dependents is tax-exempt up to ₱1,500/month
How to File Your 2019 Income Tax Return Under TRAIN
Filing your income tax return under the TRAIN Law follows these general steps:
- Gather Documents – Collect your BIR Form 2316 (for employees), receipts for deductions, and other income documents.
- Compute Taxable Income – Subtract allowable deductions from your gross income.
- Determine Tax Due – Use the TRAIN tax table to calculate your tax based on your taxable income.
- Apply Tax Credits – Subtract any withholding taxes and tax credits you’re entitled to.
- File the Return – Submit BIR Form 1700 (for employees) or 1701 (for self-employed) through:
- BIR eFPS (for large taxpayers)
- BIR eBIRForms (for most individual taxpayers)
- Manual filing at authorized agent banks or BIR offices
- Pay Any Balance Due – If you owe additional tax, pay through authorized payment channels.
Common Mistakes to Avoid When Using the TRAIN Law Calculator
- Forgetting to include all income sources – Remember to include income from side jobs, freelance work, or rental properties.
- Incorrect filing status – Your tax calculation changes significantly based on whether you’re single, married, or head of family.
- Overlooking dependents – Each qualified dependent reduces your taxable income by ₱25,000.
- Miscounting deductions – Ensure you’re applying the correct standard deduction or properly documenting itemized deductions.
- Ignoring withholding taxes – Many employees have taxes withheld from their paychecks, which should be credited against their annual tax due.
- Using the wrong tax table – Make sure you’re using the 2019 TRAIN Law rates, not the old rates or rates from other years.
Where to Get Official Information
For the most accurate and up-to-date information about the TRAIN Law, consult these official sources:
- Bureau of Internal Revenue (BIR) Official Website – The primary source for tax forms, regulations, and filing information.
- Department of Finance (DOF) TRAIN Law Page – Contains official explanations and updates about the tax reform program.
- Official Gazette – Republic Act No. 10963 – The full text of the TRAIN Law as published in the Official Gazette.
Impact of TRAIN Law on the Philippine Economy
The implementation of the TRAIN Law had several economic impacts:
Positive Effects:
- Increased disposable income – Lower taxes put more money in workers’ pockets, boosting consumption.
- Simplified tax compliance – The reduced number of tax brackets and optional standard deduction made filing easier for many taxpayers.
- Encouraged formal employment – The tax exemption for minimum wage earners reduced the incentive for underground economy work.
- Government revenue neutral – While personal income taxes were reduced, this was offset by excise taxes on fuel, sugar-sweetened beverages, and other products.
Challenges:
- Initial confusion – Many taxpayers and even some accountants struggled with the transition to the new system.
- Inflation concerns – Some economists warned that excise taxes on fuel could contribute to inflation.
- Implementation issues – There were reports of some employers not properly adjusting withholding tables.
Future of Tax Reform in the Philippines
The TRAIN Law was designed as the first package of a comprehensive tax reform program. Subsequent packages were planned to:
- Package 2 – Lower corporate income tax rates while rationalizing fiscal incentives
- Package 3 – Reform property taxation (real property tax, valuation, and assessment)
- Package 4 – Increase taxes on tobacco, alcohol, and electronic cigarettes
As of 2019, Package 1 (TRAIN) was fully implemented, while subsequent packages were still under legislative discussion. The success of TRAIN in increasing disposable income while maintaining revenue neutrality provided a model for future tax reforms in the Philippines.
Final Tips for Using This 2019 TRAIN Law Calculator
- Double-check your inputs – Small errors in income or deduction amounts can significantly affect your tax calculation.
- Consider your filing status carefully – If you’re married, calculate both jointly and separately to see which is more advantageous.
- Include all dependents – Each qualified dependent can reduce your taxable income by ₱25,000.
- Compare with old system – Our calculator shows your savings compared to the pre-TRAIN system.
- Consult a professional – For complex situations (multiple income sources, business owners), consider consulting a tax professional.
- Keep records – Maintain documentation of all income and deductions in case of BIR audit.
- File on time – The deadline for filing annual income tax returns is typically April 15 of the following year.
This 2019 TRAIN Law calculator provides a good estimate of your tax liability, but for official tax filing, always use the forms and instructions provided by the Bureau of Internal Revenue. The TRAIN Law represented a significant improvement in the Philippine tax system, making it more progressive and simpler for most taxpayers while maintaining government revenue through other tax measures.