Based on the Republic Act RA 10963, the Act which is known as the “Tax Reform for Acceleration and Inclusion” or the so-called TRAIN, the accompanying tax rates will be applied for annual or yearly income tax for every Filipino citizen. This was signed into law by our dearest President Rodrigo Duterte on December 19, 2017; the implementation began on January 1, 2018. Would the new BIR income tax rates and tax table for 2018 suffice what most of our citizens today need?
What is it? It grants every Filipino who has salaries an increase in take-home pay by reducing income tax rates and rationalizing tax rates in other goods and services.
Read: Updated SSS Contribution Table
Below is the streamlined tax tables to direct the taxpayers in a straightforward manner to be followed by the Bureau of Internet Revenue (BIR).
There are two sets for the new BIR Income Tax Rates and Tax Table for 2018:
1. Income Tax Tables to be implemented and summarized for the years 2018 – 2022 under the approved Tax Reform Bill of the Duterte Administration
Personal Income Tax Rates for 2018 – 2022
| ANNUAL INCOME | TAX RATE |
| P250,000 and below | None (0%) |
| >P250,000 to P400,000 | 20% of excess of 250,000 |
| >P400,000 to P800,000 | P30,000 + 25% of excess over P400,000 |
| >P800,000 to 2,000,000 | P130,000 + 30% of excess over P800,000 |
| >P2,000,000 to P8,000,000 | P490,000 +32% of excess over P2,000,000 |
| Above P8,000,000 | P2.41 million + 35% of excess over P8 million |
New BIR Income Tax Rates and Tax Table for 2018 – 2022
| BRACKET | TAXABLE INCOME PER YEAR | INCOME TAX RATE |
| 1 | P250,000 and below | 0% |
| 2 | Above P250,000 TO P400,000 | 20% of the excess over P250,000 |
| 3 | Above P400,000 to P800,000 | P30,000 +25% of the excess over P400,000 |
| 4 | Above P800,000 to P2,000,000 | P130,000 + 30% of the excess over P800,000 |
| 5 | Above P2,000,000 to P8,000,000 | P490,000 + 32% of the excess over P2,000,000 |
| 6 | Above P8,000,000 | P2,410,000 + 35% of the excess over P8,000,000 |
Those taxpayers who are earning with an annual income between P400,000 and P800,000 will pay a fixed amount of P30,000 plus 25% of the excess over P800,000. Observe the taxpayers who are earning an annual salary of P250,000 and below. They will no longer pay any income tax. But those who are earning between P400,000 and P800,000 will now pay the fixed amount of P30,000 plus 25% of the excess over P400,000.
Read: The New PhilHealth Contribution
Those with annual salaries between P800,000 and P2 million will be charged a fixed amount of P130,000 plus 30% on the excess over P800,000.
Taxpayers which are considered high-income earners receiving salaries between P2 million and P8 million annually will pay a fixed amount of P490,000 plus 32% of the excess over P2 million. Lastly, those who are receiving the highest income of at least P8 million per year will have withholding taxes of P2.41 million plus 35% of the excess over P8 million.
All these rates given will be implemented from 2018 until 2022, but starting 2023, the rates will further diminish.
Personal Income Tax Rates (beginning 2023)
| ANNUAL INCOME | TAX RATE |
| P250,000 and below | None (0%) |
| >P250,000 to P400,000 | 15% of excess of 250,000 |
| >P400,000 to P800,000 | P22,500 + 20% of excess over P400,000 |
| >P800,000 to 2,000,000 | P102,500 + 25% of excess over P800,000 |
| >P2,000,000 to P8,000,000 | P402,500 +30% of excess over P2,000,000 |
| Above P8,000,000 | P2.2025 million + 35% of excess over P8 million |
BIR Income Tax Table (beginning 2023)
| BRACKET | TAXABLE INCOME PER YEAR | INCOME TAX RATE |
| 1 | P250,000 and below | 0% |
| 2 | Above P250,000 TO P400,000 | 15% of the excess over P250,000 |
| 3 | Above P400,000 to P800,000 | P22,500 +20% of the excess over P400,000 |
| 4 | Above P800,000 to P2,000,000 | P102,500 + 25% of the excess over P800,000 |
| 5 | Above P2,000,000 to P8,000,000 | P420,000 + 30% of the excess over P2,000,000 |
| 6 | Above P8,000,000 | P2,202,500 + 35% of the excess over P8,000,000 |
From the new Tax Table above, it is stated that those earning an annual salary of P250,000 or below will continue to be exempted from paying income tax. On the other hand, those earning between P250,000 and P400,000 per year will be charged a lower income tax rate of 15%on the excess over P250,000.
Taxpayers with annual salaries from P400,000 to P800,000 will have withholding taxes of P22,500 plus 20% of the excess over P400,000. In addition, those employees with an annual salary between P800, 000; and P2 million will be charged a fixed amount of P102, 500 plus 25% on the excess over P800, 000.
Read: Pag-IBIG Housing Loan Monthly Amortization Table
Moreover, those who are receiving salaries between P2 million and P8 million per year will be charged P402,500 plus 30% of the excess over P2 million.
Last but certainly not the least, the highest income segment of employees with annual salaries of at least P8 million will pay P2.2025 million plus 35% of the excess over P8 million.
With the new BIR income tax rates and tax table for 2018, it’s strictly and clearly indicates the amount that taxpayers have to pay whether they’re on whatever bracket in BIR’s designation. Nevertheless, it changes once 2023 starts and giving this to taxpayers can provide preparedness and support to the following years.
What do you think about the new BIR income tax table and tax rates for 2018? Are you already experiencing the changes? Is it beneficial or do you prefer the same tax rates you’ve had many many years now? Let’s see further reports and feedback before the year ends.