MANILA, Philippines – Filipino workers are getting higher take-home pays in 2023 as the TRAIN Law further reduces personal income taxes.
Under the TRAIN or the Tax Reform for Acceleration and Inclusion Law, individuals earning purely from compensation income whose taxable earnings are less than P8 million yearly will have lower tax rates ranging from 15% to 30% starting January 1, 2023.
Filipinos earning below P250,000 are still exempt from paying personal income taxes.
Taxpayers whose annual taxable income exceeds P8 million will have a higher tax rate of 35% from the previous 32%. (READ: #AskTheTaxWhiz: Top 10 questions about the tax reform law)
Here’s the breakdown of the tax rates:
From 2018 to 2022, personal income tax for those earning above P250,000 but not more than P8 million ranged from 20% to 32%.
The new annual income tax rates have reduced taxes by 5% for those earning between over P250,000 and P2 million.
Individuals whose taxable income falls over P2 million but not greater than P8 million saw a 2% decrease in personal income tax.
“With the said reduction in the annual income tax rates, individuals earning purely compensation income will have lower withholding tax deductions from their monthly salary, thereby increasing their take-home pay,” said Bureau of Internal Revenue Commissioner Romeo Lumagui Jr.
The law has reduced personal income taxes but increased those on cars, tobacco, sugar-sweetened beverages, and fuel. Critics have repeatedly stated that the law is a burden to poor Filipinos, who have long been exempt from paying income tax, but have felt the impact of rising prices due to TRAIN.
The economic team of former president Rodrigo Duterte earlier urged the Marcos administration to suspend the tax rate reduction, citing eroded government revenues and higher debt. – Rappler.com