Tax calculator: Compute your income tax
MANILA, Philippines (UPDATED) – Wondering how your employer is computing your income tax?
You can calculate it yourself.
In our previous story, we enumerated the items you need to consider in computing your salary tax. (READ: What to consider in computing income tax).
Now, we'll show you how to compute it.
Here's a step-by-step guide for manual computation. You may also use the tax calculator below.
Step 1: Determine your taxable income.
To compute your taxable income, follow this formula:
Taxable income = (Monthly Basic Pay + Overtime Pay + Holiday Pay + Night Differential) - (SSS/PhilHealth/Pag-IBIG deductions - Tardiness - Absences)
Let's say Employee A is married with one dependent, and has a basic monthly pay of P25,000. Based on the tables of government contributions, Employee A will pay:
- P581.30 - SSS contribution (View SSS contribution table)
- P312.50 - PhilHealth contribution (View PhilHealth contribution table)
- P100 - Pag-IBIG contribution
Employee A's taxable income will therefore be P24,006.20. Here's how it is computed:
|Taxable income =||P25,000 - (P581.30 + P312.50 + P100)|
|=||P25,000 - 993.8|
Step 2: Using your taxable income, compute your income tax by referring to the Bureau of Internal Revenue (BIR) tax table.
In the BIR table below, look for your pay period (usually it's "Monthly" for employed taxpayers), then your status ("S/ME" means single/married with no dependent, "ME1/S1" means married/single with one dependent, and so on).
There are 8 columns under each pay period. Under the columns are taxable income amounts and their corresponding tax rates. As the taxable income increases, the tax rate also goes up.
In the row indicating your status, look for the highest amount that does not exceed your taxable income.
Let's use Employee A, with status "ME1/S1," as example. The highest amount that does not exceed Employee A's taxable income of P24,006.20 is P17,917 (ME1/S1 row, Column 6).
The heading of Column 6 reads "1,875.00 + 25% over."
This means Employee A's tax is P1,875 plus 25% of the difference of his taxable income (P24,006.20) and the amount in the table (P17,917).
Here's the computation:
|Tax =||1,875 + [(24,006.20-17,917) X .25]|
|=||1,875 + (6,089.2 x .25)|
|=||1,875 + 1,522.3|
We also provided a simple tax calculator below. All you need to do is select your salary period and civil status, and provide the figures for the different fields.
SSS, PhilHealth and Pag-IBIG contributions will automatically appear once you put in your basic salary. Do not use commas in the calculator. Have fun!
(Calculator developed by Justin Arciga/Rappler)
The calculator was created as an aid to compute your income tax. Results do not necessarily reflect actual taxable income. Consult a tax professional for any tax concerns.
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