1. What is Philippine Income Tax?

The Philippine Income Tax is a tax imposed on individuals and corporations based on their income. The tax rates are progressive, meaning higher income is taxed at higher rates. This calculator uses the latest tax brackets under the TRAIN Law.

2. How Does the Calculator Work?

The calculator uses the Philippine progressive tax formula:

Where:

• \( Income_{AY} \) — Annual income in Philippine Pesos (PHP)
• \( Rate \) — Progressive tax rate based on income bracket

Tax Brackets (2023):

• Up to PHP 250,000: 0%
• PHP 250,001 - 400,000: 15% of excess over 250,000
• PHP 400,001 - 800,000: PHP 22,500 + 20% of excess over 400,000
• PHP 800,001 - 2,000,000: PHP 102,500 + 25% of excess over 800,000
• PHP 2,000,001 - 8,000,000: PHP 402,500 + 30% of excess over 2,000,000
• Over PHP 8,000,000: PHP 2,202,500 + 35% of excess over 8,000,000

3. Importance of Tax Calculation

Details: Accurate tax calculation helps in financial planning, ensures compliance with tax laws, and avoids penalties for underpayment.

4. Using the Calculator

Tips: Enter your annual income in PHP and select your filing status. The calculator will compute your tax liability and net income after tax.

5. Frequently Asked Questions (FAQ)

Q1: What is AY in the calculator title?
A: AY stands for Assessment Year, the year for which the tax is being calculated.

Q2: Are there tax exemptions?
A: Yes, the first PHP 250,000 of annual income is tax-exempt for all individuals.

Q3: How often should I pay income tax?
A: Employees typically have taxes withheld monthly, while self-employed individuals file quarterly and annual returns.

Q4: Are there deductions available?
A: Yes, contributions to SSS, PhilHealth, Pag-IBIG, and certain expenses may be deductible.

Q5: Is this calculator accurate for all situations?
A: This provides an estimate. For complex situations (multiple income sources, deductions, etc.), consult a tax professional.