Philippines 2018 Tax Calculator
Calculate your income tax based on the 2018 Philippines tax table (TRAIN Law).
Tax Calculation Results
Comprehensive Guide to the 2018 Philippines Tax Table (TRAIN Law)
The Tax Reform for Acceleration and Inclusion (TRAIN) Law, officially known as Republic Act No. 10963, took effect on January 1, 2018, introducing significant changes to the Philippines’ tax system. This guide provides a detailed breakdown of the 2018 tax tables, exemptions, and calculations to help Filipino taxpayers understand their obligations under the new law.
Key Changes Introduced by TRAIN Law in 2018
- Lower personal income tax rates for most taxpayers, especially those in lower income brackets
- Increased tax-exempt threshold from ₱10,000 to ₱250,000 annually
- Simplified tax tables with fewer brackets (reduced from 7 to 6)
- Adjustments to tax exemptions for dependents and other deductions
- New excise taxes on fuel, automobiles, sugar-sweetened beverages, and other products
2018 Philippines Income Tax Table (TRAIN Law)
The following table shows the progressive tax rates for individuals under the 2018 TRAIN Law:
| Taxable Income Bracket (₱) | Tax Rate | Tax Due Calculation |
|---|---|---|
| Not over 250,000 | 0% | 0 |
| Over 250,000 but not over 400,000 | 20% | 0 + 20% of the excess over 250,000 |
| Over 400,000 but not over 800,000 | 25% | 30,000 + 25% of the excess over 400,000 |
| Over 800,000 but not over 2,000,000 | 30% | 130,000 + 30% of the excess over 800,000 |
| Over 2,000,000 but not over 8,000,000 | 32% | 490,000 + 32% of the excess over 2,000,000 |
| Over 8,000,000 | 35% | 2,410,000 + 35% of the excess over 8,000,000 |
Comparison with Pre-TRAIN Tax Table (2017)
To appreciate the changes, here’s how the 2018 tax table compares with the previous system:
| Income Bracket (₱) | 2017 Tax Rate | 2018 Tax Rate | Tax Savings Example (₱500,000 income) |
|---|---|---|---|
| 250,000 and below | 5-32% | 0% | ₱12,500 (for ₱250,000 income) |
| 250,001 – 400,000 | 20-32% | 20% | ₱5,000 |
| 400,001 – 500,000 | 25-32% | 25% | ₱17,500 |
How to Calculate Your 2018 Income Tax
Calculating your income tax under the 2018 TRAIN Law involves these steps:
- Determine your taxable income: Start with your gross income and subtract allowable deductions and exemptions.
- Apply the tax table: Use the progressive rates to calculate your tax based on your taxable income.
- Subtract withholding taxes: Deduct any taxes already withheld from your income.
- Calculate final tax due: The result is your annual tax liability.
Allowable Deductions and Exemptions
- Basic Personal Exemption: ₱50,000 (increased from ₱20,000 in 2017)
- Additional Exemption for Dependents: ₱25,000 per dependent (maximum of 4 dependents)
- Standard Deduction: 40% of gross income (optional for professionals)
- Itemized Deductions: Actual expenses with proper receipts
Special Cases and Exemptions
Minimum Wage Earners
Under the TRAIN Law, minimum wage earners (MWEs) are exempt from income tax, provided they meet these conditions:
- Their statutory minimum wage does not exceed ₱250,000 annually
- They receive only the statutory minimum wage
- They don’t receive other benefits beyond the mandatory 13th month pay and other benefits not exceeding ₱90,000
Overseas Filipino Workers (OFWs)
OFWs enjoy special tax treatments:
- Exempt from income tax on foreign-sourced income
- Only taxed on Philippine-sourced income (if any)
- May avail of the ₱250,000 tax-exempt threshold for Philippine-sourced income
Frequently Asked Questions
1. How do I know if I’m considered a minimum wage earner?
You’re considered a minimum wage earner if your basic pay doesn’t exceed the regional minimum wage set by the Department of Labor and Employment (DOLE). As of 2018, regional minimum wages ranged from ₱280 to ₱537 per day.
2. Can I still claim personal exemptions if I’m self-employed?
Yes, self-employed individuals can claim the ₱50,000 basic personal exemption and additional exemptions for dependents, provided they meet the requirements and properly declare these in their annual income tax return (ITR).
3. How does the TRAIN Law affect my 13th month pay and bonuses?
The TRAIN Law maintains the tax exemption for 13th month pay and other benefits (like productivity incentives and Christmas bonuses) up to ₱90,000 annually, provided these benefits are not part of the basic salary.
4. What should I do if my employer didn’t adjust my withholding tax after TRAIN?
If your employer hasn’t adjusted your withholding tax to reflect the new TRAIN rates, you should:
- Bring it to your HR/payroll department’s attention
- Request a computation showing the correct withholding
- If unresolved, you may file a complaint with the BIR or claim the excess withheld in your annual ITR
Authority Resources
For official information about the 2018 Philippines tax table and TRAIN Law implementation, refer to these authoritative sources:
- Bureau of Internal Revenue (BIR) Official Website – The primary government agency responsible for tax collection and enforcement in the Philippines.
- Department of Finance (DOF) TRAIN Law Resources – Official government department that oversees the implementation of tax reforms.
- Official Gazette – Full Text of RA 10963 (TRAIN Law) – The complete text of the Tax Reform for Acceleration and Inclusion Law.
Tax Planning Tips Under TRAIN Law
- Maximize your exemptions: Ensure you claim all eligible personal and additional exemptions to reduce your taxable income.
- Consider itemized deductions: If your actual expenses exceed the standard deduction, itemizing might save you more on taxes.
- Time your income and expenses: If possible, defer income to the next year or accelerate deductions into the current year to manage your tax bracket.
- Invest in tax-advantaged accounts: Contributions to PERA (Personal Equity and Retirement Account) may be deductible.
- Review your withholding: Ensure your employer is withholding the correct amount based on your expected annual income.
- File on time: Avoid penalties by filing your annual ITR before the April 15 deadline.
Common Mistakes to Avoid
- Not updating your BIR Form 2305: If you changed jobs or had changes in your exemptions, update this form with your employer.
- Missing the filing deadline: Late filing incurs penalties of ₱1,000 to ₱25,000 plus interest.
- Incorrectly calculating taxable income: Remember to subtract allowable deductions before applying the tax table.
- Not keeping proper records: Maintain receipts and documents for at least 5 years in case of BIR audit.
- Ignoring local tax obligations: Some cities have additional local taxes that must be paid.
Conclusion
The 2018 TRAIN Law brought significant changes to the Philippines’ tax system, generally reducing the tax burden for most individuals while increasing taxes on certain goods and services. Understanding how these changes affect your personal situation is crucial for proper tax planning and compliance.
This calculator provides an estimate based on the information you input. For precise calculations, especially if you have complex financial situations, consider consulting with a certified public accountant or tax professional. Always refer to the latest BIR issuances for any updates or changes to tax regulations.
Remember that proper tax compliance not only keeps you in good standing with the government but also contributes to nation-building through funding for public services and infrastructure projects.