Income Tax Philippines 2026
— TRAIN Law Brackets

2026 BIR withholding tax brackets, how to compute your taxable income, and what deductions reduce your tax.

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TRAIN Law (RA 10963) Tax Brackets — Effective 2023 Onward

The Tax Reform for Acceleration and Inclusion (TRAIN) Law took effect January 2018. The 2023+ brackets (the current and 2026-applicable schedule) are shown below.

Taxable Income Formula: Annual Taxable Income = (Monthly Gross Salary − Mandatory Deductions) × 12. Mandatory deductions include employee shares of PhilHealth, SSS, and Pag-IBIG.
0% ≤₱250k 15% ₱250–400k 20% ₱400–800k 25% ₱800k–2M 30% ₱2–8M 35% ₱8M+
Annual Taxable IncomeTax FormulaMonthly Gross (approx.)
₱0 – ₱250,000₱0 — Tax ExemptUp to ~₱20,833
₱250,001 – ₱400,00015% of excess over ₱250,000~₱20,833 – ₱33,333
₱400,001 – ₱800,000₱22,500 + 20% of excess over ₱400,000~₱33,333 – ₱66,667
₱800,001 – ₱2,000,000₱102,500 + 25% of excess over ₱800,000~₱66,667 – ₱166,667
₱2,000,001 – ₱8,000,000₱402,500 + 30% of excess over ₱2,000,000~₱166,667 – ₱666,667
Over ₱8,000,000₱2,202,500 + 35% of excess over ₱8,000,000Above ₱666,667

How Withholding Tax is Computed

Your employer computes annual tax from your taxable salary, then divides by 12 to get the monthly withholding amount. The monthly withholding tax is what appears as "BIR" or "Tax" on your payslip.

What Reduces Your Taxable Income

  • SSS employee contribution — deducted from gross before computing tax
  • PhilHealth employee premium — deducted from gross
  • Pag-IBIG mandatory contribution — deducted from gross
  • 13th month pay up to ₱90,000 — fully exempt from income tax
  • De minimis benefits — rice allowance (₱2,000/month), clothing allowance (₱6,000/year), etc.
Zero-tax threshold: An employee earning approximately ₱20,833/month gross will likely have zero withholding tax after mandatory deductions lower the annual taxable income below ₱250,000.
Self-employed & mixed income earners file their own annual ITR (BIR Form 1701) and may choose between the 8% flat tax on gross sales/receipts (over ₱250,000 threshold) or graduated TRAIN rates with itemized/OSD deductions.

Frequently Asked Questions

Do minimum wage earners pay income tax?

No. Minimum wage earners are exempt from income tax on their basic pay, holiday pay, overtime pay, night differential, and hazard pay under the TRAIN Law.

What's the difference between gross and taxable income?

Gross income is total pay before any deductions. Taxable income is gross income minus mandatory SSS/PhilHealth/Pag-IBIG contributions and exempt benefits like 13th month pay up to ₱90,000 — this is the base BIR actually taxes.

Are TRAIN Law brackets adjusted for inflation each year?

No. The TRAIN Law brackets are fixed in the statute (RA 10963) and only change through new legislation — they have stayed the same since the 2023 rate reduction, including for 2026.

Estimate Your Monthly Withholding Tax

Our calculator uses the TRAIN 2023+ brackets and automatically deducts mandatory contributions to compute your accurate tax estimate.

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