Beginning January 1, 2023, employers in the Philippines are required to use the updated withholding tax table under the TRAIN Law’s second tranche. These rates remain in effect today (2026) and will continue until the next scheduled adjustment in 2028.
The Bureau of Internal Revenue (BIR) issued the Revised Withholding Tax Tables through Revenue Regulations No. 13-2022, which replaced the 2018–2022 tables. Employers must use these updated rates when computing withholding tax on compensation.
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Source: BIR – Revenue Regulations No. 13-2022
Key updates under the TRAIN Law (effective 2023–2027)
The current withholding tax system reflects the TRAIN Law’s second tranche of income tax reductions. Below are the important thresholds and rules employees and employers should know:
1. Employees earning ₱20,833 or below per month remain exempt from withholding tax
Under the TRAIN Law, individuals earning purely compensation income of ₱250,000 or less per year are exempt from income tax. This translates to the following monthly and daily thresholds:
- ₱685 daily wage
- ₱4,808 weekly wage
- ₱10,417 semi-monthly wage
- ₱20,833 monthly wage
Employees within these salary brackets will have zero withholding tax unless they receive additional taxable income.
2. The ₱90,000 tax‑exempt ceiling for 13th month pay and bonuses still applies
Under TRAIN, the first ₱90,000 of 13th month pay and other bonuses is exempt from tax. Any amount beyond this is subject to withholding tax based on the employee’s tax bracket.
3. The ₱250,000 annual tax‑exempt bracket remains unchanged
This is the foundation of the current withholding tax system. Employees earning above ₱250,000 annually are taxed only on the excess, following the TRAIN Law’s reduced tax rates.
4. Lower income tax rates for most employees
Since 2023, the following TRAIN tax brackets apply:
- 15% tax for income over ₱250,000 up to ₱400,000
- 20% for income over ₱400,000 up to ₱800,000
- 25% for income over ₱800,000 up to ₱2,000,000
- 30% for income over ₱2,000,000 up to ₱8,000,000
- 35% for income above ₱8,000,000
These rates are already reflected in the current withholding tax tables used by employers.
Why the withholding tax table changed
The TRAIN Law (Republic Act No. 10963) introduced a two‑phase reduction in personal income taxes:
- Phase 1: 2018–2022 (first set of reduced rates)
- Phase 2: 2023–2027 (further reduced rates, now in effect)
The goal is to increase take‑home pay for Filipino workers and simplify tax compliance for employers.