Lower income taxes effective January 1, 2018

Effective January 1, 2018, Filipino workers like me will have higher take-home pay due to the lower income tax rates*. Yey!

Lower income tax is part of the Tax Reform Acceleration and Inclusion (TRAIN) bill signed into law by President Duterte on December 19, 2017 (RA 10963). Bureau of Internal Revenue released the Revised Withholding Tax Table (RMO No. 105-2017) on December 29, 2017 to facilitate the transition.

LOWER INCOME TAX

If your annual salary is not over P250,000, you become exempt from income tax.

If you are earning a little higher than that, tax rates have as well been adjusted for you. Below is the annualized Tax Schedule.:

Rappler taxes

Photo courtesy of Rappler

 Your tax exemption cap on 13th month pay is as well raised to P90,000 from P82,000.

HIGHER TAKE-HOME PAY

TRAIN law removes the basic personal exemption of P50,000 and additional personal exemption of P25,000 for each dependent up to 4. This means that you will be taxed without regard for your status.

Even so, you will still have lower income tax and higher take-home pay every payroll.

Below is the Revised Withholding Tax Table issued by Bureau of Internal Revenue. Compensation level is salary less SSS, Pag-ibig and Philhealth contributions.

 

Revised Wtax.jpg

Revised Withholding Tax Table (RMO No. 105-2017)

Here are sample computations for 2018 for semi-monthly earners:

Sample 2018 taxes.JPG

 

OTHER TAXES ON CERTAIN GOODS AND SERVICES

 Lower income tax increases your take-home pay. As you plan to get the most out of that, consider that prices of some goods are seen to go up due to other taxes that form part of the TRAIN law such as below:

NEW TAXES.jpg

Excise Taxes – Photo courtesy of ABS-CBN

 

Need help on estimating your new take-home pay? Try this 2018 Tax Calculator https://bir-excel-uploader.com/new-tax-calculator-2018/.

*Applicable tax on income of self-employed individuals and professionals have not been specified in this post.

Want to know more about TRAIN? See https://www.rappler.com/nation/191729-rodrigo-duterte-signs-tax-reform-law

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