If you earn a salary in the Philippines, your income tax is withheld from each payslip by your employer and remitted to the Bureau of Internal Revenue (BIR). This guide explains exactly how that number is worked out — so you can check your own payslip with confidence.
The two-step idea
Income tax is not charged on your full salary. It’s charged on your taxable income, which is what’s left after your mandatory government contributions are taken out:
Taxable income = Gross salary − SSS − PhilHealth − Pag-IBIGThen the tax is applied to that taxable income using the graduated tax table below. So there are always two steps: (1) find taxable income, (2) apply the table.
The 2026 income tax brackets (TRAIN law)
These annual brackets took effect on January 1, 2023 and still apply in 2026. The first ₱250,000 of taxable income per year is tax-free.
| Annual taxable income | Income tax |
|---|---|
| ₱0 – 250,000 | 0% (tax-exempt) |
| Over 250,000 – 400,000 | 15% of the excess over 250,000 |
| Over 400,000 – 800,000 | ₱22,500 + 20% of the excess over 400,000 |
| Over 800,000 – 2,000,000 | ₱102,500 + 25% of the excess over 800,000 |
| Over 2,000,000 – 8,000,000 | ₱402,500 + 30% of the excess over 2,000,000 |
| Over 8,000,000 | ₱2,202,500 + 35% of the excess over 8,000,000 |
Because the table is graduated, a higher rate only applies to the portion of your income inside that bracket — not your whole income.
How monthly withholding works
Employers withhold tax every payday. The monthly tax is essentially the annual tax divided across the year. A useful shortcut: the ₱250,000 annual exemption works out to about ₱20,833 per month of taxable income. If your monthly taxable income is at or below that, your withholding tax is zero.
Note: BIR also publishes a rounded monthly withholding table. A precise annual computation (what your year-end return reconciles to) can differ from it by a few pesos for income sitting exactly on a bracket edge. Our calculator follows the annual law.
Worked examples
₱20,000 per month — no tax
After SSS (₱1,000), PhilHealth (₱500), and Pag-IBIG (₱200), taxable income is ₱18,300/month — below the ₱20,833 exemption. Withholding tax: ₱0. Take-home pay is ₱18,300.
₱30,000 per month
Contributions total ₱2,450, so taxable income is ₱27,550/month (₱330,600/year). That falls in the 15% bracket:
- Annual tax = 15% × (330,600 − 250,000) = ₱12,090/year → about ₱1,007.50/month.
- Take-home pay ≈ ₱26,542.50/month.
₱50,000 per month
Contributions total ₱3,200, taxable income ₱46,800/month (₱561,600/year), which reaches the 20% bracket:
- Annual tax = 22,500 + 20% × (561,600 − 400,000) = ₱54,820/year → about ₱4,568.33/month.
- Take-home pay ≈ ₱42,231.67/month.
What’s not taxed
- 13th-month pay and other bonuses are tax-exempt up to a combined ₱90,000 per year.
- Mandatory SSS, PhilHealth, and Pag-IBIG contributions are deducted before tax (as shown above).
- Certain de minimis benefits (small allowances within BIR limits) are also excluded.
Frequently asked questions
Is a ₱20,000 salary taxable? In practice, no. After mandatory contributions, taxable income falls below the ₱20,833 monthly exemption, so withholding tax is zero.
Why is my payslip tax slightly different? Employers may use the rounded BIR monthly table, may include taxable allowances, or may adjust for prior months. Small differences are normal and get reconciled in your annual return.
Ready to see your own numbers? Use the Take-Home Pay Calculator to compute your net salary after tax and all three contributions, or jump straight to your SSS, PhilHealth, and Pag-IBIG contributions.