Since January 1, 2018, the Philippines has applied Tax Reform For Acceleration and Inclusion (TRAIN), which adjusted income tax rates for individuals and businesses.
Accordingly, the new policy is divided into two periods that are 2018 to 2022 and 2023. Now, phrase 2 starts.
Let’s find out the income tax table 2022 vs. 2023 differences.
Table of Contents
Who Is Qualified For Income Tax?
There are two types of objects to file income tax returns: individuals and non-individuals.
Individuals are resident citizens who have income from domestic activities or international activities. The income can be salary, interest from businesses, compensation, etc.
Non-resident citizens and aliens are also objects of income tax returns if they have income from activities within the Philippines.
Non-individuals are dictated to business organizations consisting of domestic and foreign corporations, partnerships, estates, and trusts.
Like individuals, the first object must pay tax for income from domestic and international activities. Meanwhile, foreign objects pay for income within the country.
In this article, we focus on individual income tax solely.
Income Tax Table Philippines
Income Tax Table 2022
The income tax rates for individuals in the Philippines stayed the same from 2018 to 2022. The details are shown in the following table.
| Taxable income (PHP) | Tax on the basic amount (PHP) | Tax on the excess (%) | |
| The basic amount | The excess | ||
| 0 | 250,000 | – | 0 |
| 250,000 | 400,000 | – | 20 |
| 400,000 | 800,000 | 30,000 | 25 |
| 800,000 | 2,000,000 | 130,000 | 30 |
| 2,000,000 | 8,000,000 | 490,000 | 32 |
| 8,000,000 | 2,410,000 | 35 | |
According to the table above, those with an income from 0 to P250,000 are not the object of tax income returns. The tax rate is 20 to 35%, and the basic amount is from P30,000 to P2,410,000.
Income Tax Table 2023
Since January 1, 2023, a new tax table has been applied country-wide. The rates for individuals are below:
| Taxable income (PHP) | Tax on the basic amount (PHP) | Tax on the excess (%) | |
| The basic amount | The excess | ||
| 0 | 250,000 | – | 0 |
| 250,000 | 400,000 | – | 15 |
| 400,000 | 800,000 | 22,500 | 20 |
| 800,000 | 2,000,000 | 102,500 | 25 |
| 2,000,000 | 8,000,000 | 402,500 | 30 |
| 8,000,000 | 2,202,500 | 35 | |
Tax Table 2022 Vs. Tax Table 2023
The government keeps low-income people from tax objects to protect their rights and balance their lives. Meanwhile, medium- and high-income people must pay taxes.
From the two tables above, the tax rates in 2023 are generally lower than the previous year’s.
All the basic taxes in 2022 are about 8 – 21% higher. The biggest difference belongs to the third tier (those who earn 800,000 to 2,000,000), and the least difference is the last tier (those who make above 8,000,000).
On the contrary, tax on the excess also changes, which expects to reduce a large amount of tax due.
Accordingly, the tax rate for the second, third, and fourth tiers drops by 5%. The fifth tier also slightly changes from 32% to 30%.
How To Compute Income Tax?
The formula to compute income tax due has been introduced in Revenue Regulation 2018. Accordingly, the income tax due will be calculated by:
Income tax due = Basic amount of annual income + (additional rate x rate of the excess over).
For example, those with an annual income of P450,000 belong to the third tier.
In 2022, they must pay the amount below:
Income tax due = 30,000 + (20% x 50,000) = 30,000 + 10,000= 40,000 (PHP)
In 2023, they must pay the amount below:
Income tax due = 22,500 + (15% x 50,000) = 22,500 + 7,500 30,000 (PHP)
So, they can save P10,000, which accounts for 25% of the 2022 tax due.
For those who earn over P250,000 and less than P2,000,000, the changes in the tax table 2022 to 2023 give them big incentives.
FAQs
What Is The New Income Tax Rate In The Philippines In 2023?
Depending on your annual income, the tax rate varies. There are 5 tiers, including 1st: 0 – P250,000, 2nd: P250,000 – P400,000, 3rd: P400,000 – P800,000, 4th: P800,000 – P2,000,000, 5th: P2,000,000 – P8,000,000, 6th: over 8,000,000.
The tax rate is 0%, 15%, 20%, 25%, 30%, and 35% relatively. Besides, individuals must pay the basic amount of annual income when they belong to the last four tiers, which are P22,500, P102,500, P402,500, and P2,202,000.
Who Is Required To Pay Income Tax In The Philippines?
Resident citizens, non-resident citizens, and aliens are the object of income tax in the Philippines.
Their income from sources within the country will be charged. Besides, the first object must pay income tax for its income from outside the country.
How Much Is The P50,000 Income Tax In The Philippines?
According to the tax table 2023, those who have a P50,000 annual income are not an object of income tax.
How Much Must I Pay If I Earn P900,000 Annually?
If you earn P900,000, you are in the fourth tier with a basic amount of P102,500 and a tax rate in excess of 25%. Then, you must pay the income tax due as below:
Income tax due = 102,500 + (900,000 x 25%) = 102,500 + 225,000 = 327,500 (PHP)
Conclusion
Compared with the tax table 2022, there are many changes in 2023. Generally, individuals must pay less in the basic annual income and the tax rate. Accordingly, the rate drops from 2 – 5%.
The policy for low-income individuals stays the same to protect their rights. Although over 8,000,000 individuals are charged 35% as of 2022, their basic amount of annual income drops by 8,6%.
See also: Estate Tax Philippines – Everything you need to know
