Who is exempt from withholding tax in the Philippines?

Employees earning PHP 250,000 or less per year (about PHP 20,833/month) are exempt from income tax. Minimum wage earners are also exempt regardless of the amount, including their holiday pay, overtime pay, night shift differential, and hazard pay.

What is the TRAIN Law?

The Tax Reform for Acceleration and Inclusion (TRAIN) Law, or Republic Act No. 10963, took effect on January 1, 2018. It simplified the income tax structure, raised the tax-exempt threshold to PHP 250,000, and adjusted brackets. The current rates (effective 2023 onwards) are the final phase of the TRAIN Law reform.

How does my employer compute my withholding tax?

Your employer calculates your taxable income by subtracting mandatory contributions (SSS, PhilHealth, Pag-IBIG) and other exempt benefits from your gross salary. The remaining taxable income is then matched to the withholding tax table to determine the amount withheld each pay period.

Is the withholding tax my final income tax?

For most employees with a single employer, the withholding tax serves as the final tax — your employer handles the year-end adjustment. If you have multiple income sources, you may need to file an annual income tax return (BIR Form 1700 or 1701) and pay any difference or claim a refund.

How do I check if my employer is computing my tax correctly?

Review your payslip for the gross salary, deductions (SSS, PhilHealth, Pag-IBIG), and withholding tax amount. You can verify the tax by using the BIR withholding tax table or our Withholding Tax Calculator. Your BIR Form 2316 (Certificate of Compensation Payment/Tax Withheld) issued at year-end should match your total withholdings.

Withholding Tax Table Philippines

Under the TRAIN Law (effective 2023 onwards), the first PHP 250,000 of annual taxable income is tax-exempt. Income above that is taxed at progressive rates: 15% (PHP 250K–400K), 20% (PHP 400K–800K), 25% (PHP 800K–2M), 30% (PHP 2M–8M), and 35% (over PHP 8M).

Updated March 14, 2026

This page is not affiliated with any Philippine government agency. Information is based on publicly available official sources and may change. Always verify details with the relevant government office.

Annual Income Tax Table (TRAIN Law, 2023 onwards)

Taxable Income (Annual)	Tax Rate
PHP 0 – PHP 250,000	0% (Exempt)
PHP 250,001 – PHP 400,000	15% of excess over PHP 250,000
PHP 400,001 – PHP 800,000	PHP 22,500 + 20% of excess over PHP 400,000
PHP 800,001 – PHP 2,000,000	PHP 102,500 + 25% of excess over PHP 800,000
PHP 2,000,001 – PHP 8,000,000	PHP 402,500 + 30% of excess over PHP 2,000,000
Over PHP 8,000,000	PHP 2,202,500 + 35% of excess over PHP 8,000,000

Monthly Withholding Tax Table

This is the monthly equivalent used by employers to compute the tax withheld from your salary each month.

Over	But Not Over	Base Tax	Rate	Of Excess Over
PHP 0	PHP 20,833	₱0.00	0%	₱0.00
PHP 20,833	PHP 33,333	₱0.00	15%	₱20,833.00
PHP 33,333	PHP 66,667	₱1,875.00	20%	₱33,333.00
PHP 66,667	PHP 166,667	₱8,541.67	25%	₱66,667.00
PHP 166,667	PHP 666,667	₱33,541.67	30%	₱166,667.00
PHP 666,667	and above	₱183,541.67	35%	₱666,667.00

Who It Applies To

Withholding tax on compensation applies to all individuals earning employment income in the Philippines. Your employer is required by law to withhold income tax from your salary each pay period and remit it to the BIR.

Private sector employees — regular, contractual, and probationary employees of private companies
Government employees — national and local government workers (except those covered by special tax rules)
Minimum wage earners — exempt from withholding tax, including holiday pay, overtime, and night differential

Self-employed individuals and freelancers file their own taxes quarterly using BIR Form 1701Q and are not subject to employer withholding.

Worked Example

Scenario: Employee with gross monthly salary of PHP 30,000.

Monthly gross salary: PHP 30,000
Less mandatory deductions (SSS, PhilHealth, Pag-IBIG): ~PHP 1,800
Monthly taxable income: ~PHP 28,200
Falls in bracket: PHP 20,833 – PHP 33,333 (15% rate)
Tax: PHP 0 + 15% x (28,200 – 20,833) = 15% x 7,367 = PHP 1,105
Monthly take-home: PHP 30,000 – 1,800 – 1,105 = PHP 27,095

Common Tax-Exempt Compensation

13th month pay and other benefits up to PHP 90,000 per year
SSS, PhilHealth, and Pag-IBIG employee contributions
De minimis benefits (rice subsidy, uniform, medical allowance, etc.)
Mandatory contributions to retirement funds
Holiday pay, overtime pay, night shift differential, and hazard pay (for minimum wage earners)

Compute Your Withholding Tax

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