Effective January 1, 2018, employers are required to apply new withholding tax rates on compensation of their employees.
The Bureau of Internal Revenue has released the Revised Withholding Tax Table which should be used in computing the tax to be withheld on every payment of compensation to employees. The Table is effective from January 1, 2018 to December 31, 2022.
| Compensation Level | Prescribed Minimum Withholding Tax |
|---|---|
| Below P20,833 | 0 |
| P20,833 to P33,332 | 0 + 20% of amount above P20,833 |
| P33,333 to P66,666 | P2,500 + 25% of amount above P33,333 |
| P66,667 to P166,666 | P10,833.33 + 30% of amount above P66,667 |
| P166,667 to P666,666 | P40,833.33 + 32% of amount above P166,667 |
| P666,667 and above | P200,833.33 + 35% of amount above P666,667 |
Source: BIR
New income tax rates under the Republic Act No. 10963, otherwise known as the Tax Reform for Acceleration and Inclusion (TRAIN) Law is reflected in the new withholding tax table.
Under this version of withholding tax table, employees receiving wages not exceeding the following daily, weekly, semi-monthly or monthly rates are exempt from paying withholding tax:
- P685 daily wage
- P4,808 weekly wage
- P10,417 semi-monthly wage
- P20,833 monthly wage
However, such employees may still be liable to income tax if they receive additional taxable compensation or bonuses during the current tax year. The tax-exempt threshold for 13th month pay and bonuses is now at P90,000. On the other hand, the tax-exempt bracket in the schedule of income tax rates is P250,000.
Related Links:
- How to verify your lost or forgotten TIN
- List of BIR offices in the Philippines
- How can Filipinos with overseas income apply for TIN
