What is the Philippines Income Tax?
Under the TRAIN law, the first ₱250,000 of annual taxable income is entirely exempt, with rates rising from 15% to 35% above that.
Three mandatory contributions are deducted before tax: SSS (social security), PhilHealth (health insurance), and Pag-IBIG (housing fund). The 13th month pay is tax-free up to ₱90,000.
Formula & worked example
Tax = 0% to ₱250,000, then 15/20/25/30/35% bands
Worked example: a ₱45,000 monthly salary pays ₱1,500 SSS (capped at the ₱30,000 salary credit), ₱1,125 PhilHealth and ₱200 Pag-IBIG. Taxable monthly income is ₱42,175, or ₱506,100 a year, giving annual tax of about ₱43,720. Monthly net pay lands near ₱38,532, plus a tax-free 13th month payment.
How to use this philippines income tax calculator
- Enter your monthly basic salary.
- Contributions are computed automatically at current rates.
- Select whether you receive the mandatory 13th month pay.
- Note that the 13th month is tax-exempt up to ₱90,000.
Smart tips
- The 13th month pay is mandatory for rank-and-file employees and tax-free up to ₱90,000.
- De minimis benefits — rice allowance, medical allowance, uniform allowance — are tax-exempt within limits.
- Voluntary Pag-IBIG MP2 savings earn tax-free dividends historically above 6%.
- Self-employed individuals earning under ₱3 million can elect a flat 8% tax on gross receipts instead of graduated rates.
- Contribution rates change periodically — check the current SSS and PhilHealth schedules.
Frequently asked questions
How much is income tax in the Philippines?
The first ₱250,000 of annual taxable income is exempt, with rates of 15%, 20%, 25%, 30% and 35% above that under the TRAIN law.
Is 13th month pay taxable?
It is exempt up to ₱90,000 combined with other benefits. Anything above that is taxable.
What are the mandatory deductions?
SSS for social security, PhilHealth for health insurance, and Pag-IBIG for the housing development fund.
What is the 8% tax option?
Self-employed and professionals earning under ₱3 million may elect a flat 8% on gross receipts in place of graduated income tax and percentage tax.
Want the theory behind the numbers? Read our Asia tax guides on the Money Blog.