Freelancer Tax Calculator: 8% vs Graduated
Self-employed in the Philippines? See which tax option costs you less — the 8% flat tax or the graduated rates — based on your income and expenses.
Compare your freelancer tax options
| 8% flat tax | |
|---|---|
| Graduated total | |
| — income tax | |
| — 3% percentage tax | |
| — deduction used |
Estimate for a purely self-employed individual or professional with annual gross ≤ ₱3,000,000 who has opted into the regime shown. The 8% option replaces both the income tax and the 3% percentage tax. Mixed-income earners don't get the ₱250,000 deduction on the business portion. Not tax advice — confirm with the BIR or an accountant.
The two options
Option A — 8% flat tax
You pay 8% of your gross income above ₱250,000, and nothing else — it replaces both the income tax and the 3% percentage tax. No need to track expenses. Available to purely self-employed individuals/professionals with gross sales of ₱3,000,000 or less who opt in (usually on the first quarter return or upon registration).
Option B — Graduated rates
You pay the TRAIN graduated income tax on your net income (gross minus deductions) plus a 3% percentage tax on gross. Deductions are the higher of your actual expenses (itemized) or the 40% Optional Standard Deduction (OSD).
Which is better?
- Low expenses → 8% usually wins. Most online freelancers, VAs, and writers fall here.
- High expenses (above ~40% of gross) → graduated can win, because you deduct real costs and may pay little or no income tax.
- The calculator above picks the cheaper one for your numbers and shows the yearly saving.
Example: ₱600,000 gross, low expenses
- 8%: 8% × (600,000 − 250,000) = ₱28,000
- Graduated: ₱16,500 income tax (on the 360k net after 40% OSD) + ₱18,000 percentage tax = ₱34,500
- → 8% saves ₱6,500 a year.
Employed too, or comparing a job offer? Use the Take-Home Pay Calculator, or read how income tax is computed.
Last updated: 2026-06-28. Based on RA 10963 (TRAIN): the 8% option, the ₱250,000 deduction, the 40% OSD, and the 3% percentage tax (the temporary 1% rate expired June 2023). Informational only, not tax advice — confirm with the BIR or an accountant.