7 tax brackets from 0% to 35%
Philippines' hidden benefit: first PHP 250,000 is completely tax-free. Rates run 0-35%. A PHP 1,000,000 earner pays ~PHP 150,000 (~15%). OFW income: exempt while abroad. Self-employed option: 8% flat tax on gross sales under PHP 3M. Add SSS (3-4.5%), PhilHealth (2.5%), Pag-IBIG (2%). Non-residents: 25% flat.
Philippines has 6 progressive brackets from 0% to 35%, with the first PHP 250,000 (~$4,400 USD) completely tax-free—a major benefit for lower earners. The TRAIN Law reforms simplified the system. Employees also pay SSS (3-4.5%), PhilHealth (2.5%), and Pag-IBIG (2%) contributions. A PHP 1,000,000 earner (~$17,500) pays roughly PHP 150,000 income tax (~15%). OFW income is exempt from Philippine tax while working abroad. Self-employed can choose 8% flat tax on gross sales up to PHP 3 million. Non-residents pay 25% flat on Philippine-source income. Filing deadline is April 15. Use our calculator to estimate your Philippine tax liability.
| Taxable Income | Tax Rate |
|---|---|
| ₱0 - ₱250,000 | 0% |
| ₱250,000 - ₱400,000 | 15% |
| ₱400,000 - ₱800,000 | 20% |
| ₱800,000 - ₱2,000,000 | 25% |
| ₱2,000,000 - ₱8,000,000 | 30% |
| Over ₱8,000,000 | 35% |
Note: These are marginal rates - you only pay the higher rate on income within each bracket.
Source: Bureau of Internal Revenue
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Get Paid as a Contractor →Philippines has 6 brackets under the TRAIN Law: 0% on PHP 0-250,000, 15% on PHP 250,000-400,000, 20% on PHP 400,000-800,000, 25% on PHP 800,000-2,000,000, 30% on PHP 2,000,000-8,000,000, and 35% above PHP 8,000,000. The PHP 250,000 tax-free threshold significantly benefits lower and middle earners.
Employees pay three mandatory contributions: SSS (Social Security System) at 4.5% of salary capped at PHP 30,000, PhilHealth (health insurance) at 2.5% of salary, and Pag-IBIG Fund (home development) at 2% capped at PHP 100/month. Employers match these contributions. Total employee burden is roughly 9% on moderate salaries.
No—Overseas Filipino Workers (OFWs) are exempt from Philippine income tax on earnings while working abroad. This applies regardless of amount earned. However, income from Philippine sources (rental income, local investments) remains taxable. Upon permanent return, all income becomes subject to Philippine tax based on residency rules.
Self-employed individuals and professionals earning up to PHP 3 million gross can elect 8% flat tax on gross receipts instead of graduated rates. This simplifies compliance—no need for detailed expense records. The 8% rate often results in lower tax than graduated rates for those with modest profit margins. Election is made upon registration or at year-end.
Annual income tax returns (BIR Form 1700 for employees, 1701 for self-employed) are due April 15 following the tax year. Quarterly returns due within 45 days of each quarter end. Late filing incurs 25% surcharge plus 12% annual interest. Most employees rely on employer withholding and only file if claiming refunds.
Last Updated: March 2026