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 ₱1,750 SSS (5% of the ₱35,000 maximum monthly salary credit that applies from January 2025), ₱1,125 PhilHealth and ₱200 Pag-IBIG. Taxable monthly income is ₱41,925, or ₱503,100 a year, giving annual tax of about ₱43,120. Monthly net pay lands near ₱38,332, 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? Browse the Money Blog for worked guides.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 15 Oct 2026. Sources: Bureau of Internal Revenue — graduated income tax rates. How we check these numbers.