Philippine income tax calculator

What the lines mean

Annual scenarios for an individual resident Philippine citizen with ordinary domestic business or professional sales. Enter gross employment pay including bonuses and benefits. The salary breakdown derives taxable compensation for these calculations. Blank or zero gross pay means no employment; positive gross pay retains employment status even if deductions reduce taxable pay to zero.

• 8%: 8% of revenue above ₱250,000 for pure self-employment. With employment, tax on salary plus 8% of the full business revenue. Costs do not reduce this base.
• OSD: graduated tax on taxable salary plus 60% of revenue. No further deduction for cost of goods sold, operating costs or percentage tax.
• Itemized: graduated tax on salary plus revenue less allowable, substantiated costs. Non-VAT percentage tax is also deducted once, assuming deductibility in the modeled period. Business taxable income is floored at zero.
• BMBE: covered business operating income is exempt; salary tax and applicable percentage tax or VAT remain.

All totals are annual modeled tax payable/remittance before withholding credits, prior payments and penalties. Rates use business revenue + taxable salary as the denominator. VAT remitted is not necessarily an economic cost borne by the owner.

Availability matters

8% requires non-VAT status, a timely election and other eligibility conditions. Existing or voluntary VAT registration can change the result below ₱3 million. Other non-operating income is excluded here but can affect actual 8% eligibility and its base.

Above ₱3 million, both charts model a full year of ordinary VAT treatment. Actual registration considers the preceding and expected next 12 months. The charts do not calculate a midyear transition.

BMBE is always conditional

Requires qualifying production, processing, manufacturing, trading or services, qualifying assets of no more than ₱3 million (including financed assets, excluding the relevant land), enterprise independence, a DTI Certificate of Authority and BIR exemption requirements.

Government-licensed professional practice is excluded. Unlicensed freelance services are not automatically excluded, but still need to qualify. Large-enterprise branches or controlled operations can be excluded. The DTI certificate generally lasts two years, subject to continuing eligibility and renewal. BMBE and 8% cannot be combined; registration and elections restrict switching.

VAT scenarios

A · No credits: 12% output VAT, with no allowable input credit. Costs can represent wages or non-VAT purchases.

B · Costs creditable: 12% output VAT less 12% of modeled operating costs. Assumes VAT-exclusive eligible purchases, valid VAT invoices and credits usable in the same period.

The deductible cost amount stays the same in both scenarios. Recoverable input VAT is not an additional income-tax deduction. These are illustrative cost compositions, not universal bounds. The model does not assume refunds of excess VAT credits.

Outside this model

Corporations, partnerships, actual employment classification, loss carryforwards, exempt or zero-rated sales, exports, special percentage taxes, passive income, capital gains, final taxes and foreign-tax credits. A foreign client alone does not establish zero-rating. Self-employed social contributions, GSIS, local taxes, permits and accounting fees are excluded. Employee SSS, PhilHealth and Pag-IBIG are included in the salary calculation.

Gross salary and statutory deductions

Full-year private employment with 12 equal monthly basic salaries and one 13th-month payment. Additional bonuses and the de minimis package are already inside annual gross. Monthly basic = (gross − benefits − additional bonuses) ÷ 13.

SSS uses the 2025 contribution table: a 5% employee share on monthly salary credits from ₱5,000 to ₱35,000, including the mandatory provident-fund share above ₱20,000. Regular cash benefits and non-Christmas bonuses enter the monthly SSS base even when exempt from income tax; the 13th month and Christmas bonuses are excluded.

PhilHealth employee share is 2.5% of monthly basic, with a ₱10,000 floor and ₱100,000 ceiling. Pag-IBIG employee savings use basic pay plus modeled allowances, at 1% through ₱1,500 and 2% above, capped at ₱10,000 fund salary. Employer shares and Employees’ Compensation are not deducted from the employee.

Contributions reduce taxable compensation and appear separately from the chart’s tax totals. No automatic minimum-wage-earner exemption, government employment, partial-year employment, variable monthly basic, overtime or contribution arrears are modeled.

Graduated tax · 2023 onward

The first ₱250,000 is already reflected in these brackets; it is not deducted again.

VAT / 8% revenue ceiling

₱3,000,000.00

Individual OSD

40%

Section 116 percentage tax

3%

Ordinary VAT

12%

BMBE asset ceiling, not sales

₱3,000,000.00