Philippine Individual Income Tax Rates Explained
Philippine individuals do not face one income tax rate. Most compensation and business income goes through the graduated schedule, but bank interest, dividends, property sales, the 8% option and nonresident aliens each have their own rate. This guide lists every current rate with its legal basis, the period it covers, and how to read it.
Quick answer
For taxable income from January 1, 2023 onward, Philippine individuals pay graduated rates from 0% on the first ₱250,000 up to 35% on the portion over ₱8,000,000 (Section 24(A)(2)(a), NIRC, as amended by RA 10963). Qualified self-employed people may elect 8% instead, and passive income such as bank interest carries separate final taxes.
First action: find your taxable income for the year (your BIR Form 2316 shows it for employment income), then match it to the 2023-onward table below.
What is the current graduated income tax table?
Section 24(A)(2)(a) of the National Internal Revenue Code, as amended by Section 5 of RA 10963 (TRAIN), sets this schedule for taxable income earned from January 1, 2023 onward. No later law found in this run changed it.
| Annual taxable income | Tax due (2023 onward) | Marginal rate |
|---|---|---|
| Not over ₱250,000 | ₱0 | 0% |
| Over ₱250,000 to ₱400,000 | 15% of the excess over ₱250,000 | 15% |
| Over ₱400,000 to ₱800,000 | ₱22,500 + 20% of the excess over ₱400,000 | 20% |
| Over ₱800,000 to ₱2,000,000 | ₱102,500 + 25% of the excess over ₱800,000 | 25% |
| Over ₱2,000,000 to ₱8,000,000 | ₱402,500 + 30% of the excess over ₱2,000,000 | 30% |
| Over ₱8,000,000 | ₱2,202,500 + 35% of the excess over ₱8,000,000 | 35% |
Each fixed amount in the second column is simply the full tax on the band below it. For example, ₱22,500 is 15% of the ₱150,000 band between ₱250,000 and ₱400,000. That is why the table never charges a higher rate on income already counted in a lower band.
TRAIN removed the old personal and additional exemptions and replaced them with the ₱250,000 zero-rated band. If you want the full sequence from gross income to tax, see how Philippine income tax works for individual taxpayers.
Which rates applied from 2018 to 2022?
The same section of TRAIN set an earlier, higher schedule for January 1, 2018 to December 31, 2022. Use it only for returns, amendments or assessments covering those years. The rows below match the text of RA 10963 and the Senate Tax Study and Research Office summary of TRAIN.
| Annual taxable income | Tax due (2018 to 2022) |
|---|---|
| Not over ₱250,000 | ₱0 |
| Over ₱250,000 to ₱400,000 | 20% of the excess over ₱250,000 |
| Over ₱400,000 to ₱800,000 | ₱30,000 + 25% of the excess over ₱400,000 |
| Over ₱800,000 to ₱2,000,000 | ₱130,000 + 30% of the excess over ₱800,000 |
| Over ₱2,000,000 to ₱8,000,000 | ₱490,000 + 32% of the excess over ₱2,000,000 |
| Over ₱8,000,000 | ₱2,410,000 + 35% of the excess over ₱8,000,000 |
The cut from 2023 lowered every band between ₱250,000 and ₱8,000,000 by two to five percentage points. The zero band and the 35% top rate did not change.
What is the difference between marginal and effective rates?
The marginal rate is the rate in the band your last peso falls into. The effective rate is total tax divided by total taxable income. Because only the slice above each threshold is taxed at the higher rate, your effective rate is always lower than your marginal rate once you pass ₱250,000. The figures below use the 2023-onward table, with the effective rate rounded to two decimal places.
| Taxable income | Tax due | Marginal rate | Effective rate |
|---|---|---|---|
| ₱300,000 | ₱7,500 | 15% | 2.50% |
| ₱600,000 | ₱62,500 | 20% | 10.42% |
| ₱1,000,000 | ₱152,500 | 25% | 15.25% |
| ₱3,000,000 | ₱702,500 | 30% | 23.42% |
| ₱10,000,000 | ₱2,902,500 | 35% | 29.03% |
A raise that pushes you into a higher band does not raise the tax on the income you already had. Only the extra pesos above the threshold are taxed at the new rate.
What rates apply instead of the graduated table?
Several kinds of income never go through the graduated table, because the NIRC gives them their own rate. These are the main ones for individuals, with the authority for each.
| Income or option | Rate | Legal basis |
|---|---|---|
| 8% option, purely self-employed or professional within ₱3,000,000 | 8% of gross sales or receipts and other non-operating income over ₱250,000 | Sec. 24(A)(2)(b), as amended by RA 10963 |
| Interest on bank deposits, deposit substitutes and trust funds | 20% final tax | Sec. 24(B), as amended by RA 12214 |
| Cash or property dividends from a domestic corporation | 10% final tax | Sec. 24(B), as amended by RA 12214 |
| Royalties | 20% final tax; 10% on books, literary works and musical compositions | Sec. 24(B), as amended by RA 12214 |
| Prizes over ₱10,000 and PCSO or Lotto winnings over ₱10,000 | 20% final tax | Sec. 24(B), as amended by RA 12214 |
| Net capital gains on shares not traded on the stock exchange | 15% final tax | Sec. 24, as amended by RA 12214 |
| Sale of Philippine real property held as a capital asset | 6% of the higher of gross selling price or fair market value | Sec. 24(D)(1), NIRC |
These rates come from the amended Section 24 in RA 12214 (Capital Markets Efficiency Promotion Act) and the NIRC (RA 8424). Prizes of ₱10,000 or less are not under the 20% final tax: they are added to income taxed at the graduated rates, while PCSO and Lotto winnings of ₱10,000 or less are exempt. Shares sold through the local stock exchange are covered by a stock transaction tax of 1/10 of 1% of the gross selling price under Section 127, which is a percentage tax, not income tax.
Deposits and instruments from before July 1, 2025. Section 28 of RA 12214 keeps the tax exemption or preferential rate that applied to financial instruments issued or transacted before July 1, 2025 for their remaining term. If you hold an older time deposit or foreign currency deposit, ask your bank which rate it withholds before assuming the 20% rate applies.
Final taxes are withheld by the payer, such as your bank or the corporation paying the dividend. You do not add that income again to taxable income in your annual return.
Who is taxed at a rate outside the regular table?
The rate you pay depends on your taxpayer class as much as your income. Check these groups before using the table:
- Minimum wage earners are exempt from income tax on their taxable income, and the exemption covers their holiday pay and related pay (proviso to Section 24(A), as amended by RA 10963). Other pay above the statutory minimum wage can be taxable.
- Mixed income earners pay the graduated rates on all compensation income. The business or professional part is taxed at the graduated rates or, if gross receipts are within the ₱3,000,000 VAT threshold, at 8% (Section 24(A)(2)(c)).
- Nonresident aliens engaged in trade or business in the Philippines are generally taxed under Section 24, the same schedule as citizens, on Philippine-source income (Section 25(A)).
- Nonresident aliens not engaged in trade or business pay a 25% final tax on their entire gross income from Philippine sources (Section 25(B), as amended by RA 12214).
- Alien employees of regional headquarters, offshore banking units and petroleum contractors had a 15% preferential rate under Section 25(C) to (E). RA 10963 limits it to existing entities and excludes entities registering with the SEC after January 1, 2018 (Section 25(F)).
Whether a given receipt is income at all comes before the rate question. See what income is subject to Philippine income tax and what income is excluded before tax is computed.
Worked example: reading the rates for one taxpayer
Hypothetical example for illustration only. The person and figures are invented.
Liza is a resident citizen employee for calendar year 2025 with one employer. Her taxable compensation, after excluded benefits and her share of mandatory contributions, is ₱1,000,000. She also earned ₱50,000 of interest on a peso savings account opened in August 2025.
- Step 1, find the band: ₱1,000,000 is over ₱800,000 but not over ₱2,000,000, so the 2023-onward row gives ₱102,500 + 25% of the excess over ₱800,000.
- Step 2, compute the excess: ₱1,000,000 − ₱800,000 = ₱200,000.
- Step 3, apply the marginal rate: 25% × ₱200,000 = ₱50,000.
- Step 4, add the fixed amount: ₱102,500 + ₱50,000 = ₱152,500 income tax on compensation.
- Step 5, effective rate: ₱152,500 ÷ ₱1,000,000 = 15.25%.
- Step 6, the interest: 20% final tax × ₱50,000 = ₱10,000, withheld by the bank. It is not added to the ₱1,000,000.
- Rounding: all amounts are whole pesos; the BIR forms compute to centavos, so round only the final percentage shown here.
For comparison, the same ₱1,000,000 under the 2018 to 2022 schedule would have been ₱130,000 + 30% × ₱200,000 = ₱190,000. What would change the answer: a second employer in the same year, freelance income on the side, or interest on a deposit made before July 1, 2025 that kept an older rate.
Which rate applies to you?
Start from your situation in the first column, then confirm the details in the matching section above.
| Your situation | Rate to use | Where it comes from |
|---|---|---|
| Employee, taxable income for 2023 or later | Graduated 0% to 35% table | Sec. 24(A)(2)(a), 2023-onward schedule |
| Return or assessment for 2018 to 2022 | Graduated 0% to 35% table, older bands | Sec. 24(A)(2)(a), 2018–2022 schedule |
| Minimum wage earner | Exempt on taxable income and holiday pay | Proviso to Sec. 24(A) |
| Purely self-employed, receipts within ₱3,000,000 | Graduated table, or 8% over ₱250,000 if elected | Sec. 24(A)(2)(b) |
| Self-employed, receipts over ₱3,000,000 | Graduated table only | Sec. 24(A)(2)(b) |
| Bank interest, dividends, prizes over ₱10,000 | Final tax at 20% or 10%, withheld | Sec. 24(B), as amended by RA 12214 |
| Nonresident alien not in business here | 25% final tax on Philippine gross income | Sec. 25(B) |
If you fit more than one row, for example an employee with bank interest, each type of income keeps its own rate.
Your options and what to do next
If you are an employee
- Get your BIR Form 2316 from your employer and check the taxable compensation and tax withheld it shows against the 2023-onward table.
- If the tax withheld looks wrong, raise it with HR or payroll first: the employer computes withholding and makes the year-end adjustment.
- If you had two or more employers in the year, add the taxable compensation from each Form 2316, apply the table once to the total, and file your own annual return.
If you are self-employed or a professional
- Compute your tax both ways, graduated rates and 8%, on your real receipts before your first quarterly return of the year, because the choice applies for the year.
- Confirm with your Revenue District Office (RDO) which tax type is on your registration record. See how to register on BIR ORUS if you are not yet registered.
- Keep your invoices, BIR Form 2307 certificates from clients and expense records if you use itemized deductions.
Where to file and pay
The annual income tax return is filed on or before April 15 of the following year (Section 51(C)(1), NIRC). Filing and payment are separate steps: tax over ₱2,000 may be paid in two equal installments, the second on or before October 15 (Section 56(A)(2), as amended by RA 10963). For calendar year 2025 returns, BIR RMC No. 20-2026 directs filing through eFPS for mandated or enrolled taxpayers, the Offline eBIRForms Package v7.9.5 for others (including no-payment returns), or a BIR-certified tax software provider, with payment through eFPS banks, BIR ePay gateways or, in the cases it lists, over the counter at an authorized agent bank. Check the circular for the current filing season before you file.
First action: write down your taxable income for the year and find its row in the 2023-onward table. That single step tells you your marginal rate and the fixed amount to start from.
Key takeaways
- For 2023 onward, individual taxable income is taxed at 0% to 35% across six bands (Section 24(A)(2)(a), as amended by RA 10963).
- The 2018 to 2022 schedule was higher in the middle bands; use it only for those years.
- Each higher rate applies only to the slice above its threshold, so the effective rate stays below the marginal rate.
- Bank interest (20%), dividends (10%), prizes over ₱10,000 (20%) and real property sales (6%) carry their own final taxes.
- Purely self-employed taxpayers within ₱3,000,000 may elect 8% on receipts over ₱250,000.
- Minimum wage earners are exempt; nonresident aliens not in business here pay 25% final tax.
More guides are in the Income Tax Basics & Rates hub. Related: how to calculate taxable income from gross income.
Related: how to determine which of these rates applies to you, step by step.
Frequently asked questions
What are the current income tax rates for individuals in the Philippines?
For taxable income earned from January 1, 2023 onward, the graduated rates are 0% on the first ₱250,000, then 15%, 20%, 25% and 30% on successive bands, and 35% on taxable income over ₱8,000,000, under Section 24(A)(2)(a) of the NIRC as amended by RA 10963.
Is the 35% rate applied to all of my income if I earn over ₱8,000,000?
No. The 35% rate applies only to the portion of taxable income above ₱8,000,000. The first ₱8,000,000 is covered by a fixed amount of ₱2,202,500, so the effective rate stays below 35%.
What is the difference between my marginal rate and my effective rate?
The marginal rate is the rate on your last peso of taxable income, the band you fall in. The effective rate is total tax divided by taxable income. On ₱1,000,000 of taxable income the marginal rate is 25% but the effective rate is 15.25%.
Are bank interest and dividends taxed at the graduated rates?
No. Interest on bank deposits is generally subject to a 20% final tax and cash or property dividends from a domestic corporation to a 10% final tax, both withheld at source under Section 24(B) as amended by RA 12214. They are not added to taxable income in the annual return.
Did the CMEPA law change the graduated income tax rates?
No. RA 12214 (CMEPA) amended the rules on passive income such as interest, dividends and share transactions. Its amendment of Section 24 covers subsection (B); the graduated schedule in Section 24(A) for 2023 onward is unchanged.
Can a self-employed person pay 8% instead of the graduated rates?
Yes, if purely self-employed or a professional whose gross sales or receipts and other non-operating income do not exceed the ₱3,000,000 VAT threshold. The 8% applies to the amount over ₱250,000 and replaces both the graduated rates and the percentage tax.
What rate applies to a nonresident alien not engaged in business in the Philippines?
A final tax of 25% on the entire gross income received from Philippine sources, under Section 25(B) of the NIRC as amended by RA 12214. Gains on certain shares and Philippine real property follow their own rules.
Magkano ang tax kung ₱250,000 lang o mas mababa ang taxable income ko?
Zero. Sa graduated rates mula 2023, 0% ang tax sa taxable income na hindi lalampas ng ₱250,000. Pero kung may negosyo ka o nagpa-practice ng propesyon, kailangan mo pa ring mag-file ng income tax return.
Ano ang rate na gagamitin ko kung ang ITR ko ay para sa 2022?
Ang lumang schedule para sa January 1, 2018 hanggang December 31, 2022: 20%, 25%, 30% at 32% sa mga band, at 35% sa lampas ₱8,000,000. Ang bagong mas mababang rates ay para lang sa kita mula 2023 pataas.
May income tax ba ang minimum wage earner?
Wala. Exempt sa income tax ang minimum wage earner sa kanyang taxable income, pati ang holiday pay at iba pang kaugnay na bayad, ayon sa Section 24(A) na inamyendahan ng TRAIN Law. Ang ibang kita na hindi minimum wage ay puwedeng taxable.
Sources
- National Internal Revenue Code of 1997, RA 8424: Sections 24(D)(1), 51(C)(1).
- RA 10963 (TRAIN Law), Section 5 amending Section 24(A) (both rate schedules, 8% option, mixed income, minimum wage proviso), Section 25(C) to (F), Section 56(A)(2) and Section 109(BB).
- RA 12214 (Capital Markets Efficiency Promotion Act, May 29, 2025), Section 4 amending Section 24(B), Section 5 amending Section 25, Section 127, and the Section 28 transitory provision.
- Senate Tax Study and Research Office, Taxbits, January–February 2018: TRAIN personal income tax schedules.
- BIR Revenue Memorandum Circular No. 20-2026 (March 16, 2026): filing and payment of calendar year 2025 annual income tax returns.
This guide is general information about Philippine tax law, not tax or legal advice. For your specific facts, consult a CPA, a tax lawyer or your BIR Revenue District Office.
By the TaxCode.ph Editorial Team. Sources checked as of: November 12, 2026.
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