Quick answer: To compute your income tax, (1) annualize your salary, (2) subtract SSS, PhilHealth and Pag-IBIG to get taxable income, (3) add any 13th month and bonus amount above ₱90,000, (4) apply the TRAIN table and (5) divide by 12 for a monthly view. The first ₱250,000 is exempt. Or use the calculator →
This page teaches the method. For the full theory read the income tax guide, and for the tables see Tax Table 2026.
Step 1: Find your annual gross income
If you are paid monthly, multiply by 12. If you are paid semi-monthly, multiply each cut-off by 24; if daily, multiply the daily rate by the days you actually work.
₱35,000 × 12 = ₱420,000 per yearDo not add your 13th month pay here. It is handled in Step 3 because it is exempt up to ₱90,000.
Step 2: Subtract your mandatory contributions
Your employee share of SSS, PhilHealth and Pag-IBIG is not taxable. With 2026 rates, the monthly amounts are:
| Monthly salary | SSS (5%, max credit ₱35,000) | PhilHealth (2.5%) | Pag-IBIG | Total |
|---|---|---|---|---|
| ₱20,000 | ₱1,000 | ₱500 | ₱200 | ₱1,700 |
| ₱35,000 | ₱1,750 | ₱875 | ₱200 | ₱2,825 |
| ₱60,000 | ₱1,750 | ₱1,500 | ₱200 | ₱3,450 |
| ₱100,000 | ₱1,750 | ₱2,500 | ₱200 | ₱4,450 |
Check your own with the SSS, PhilHealth and Pag-IBIG calculators. Then:
Taxable income = annual gross − (monthly contributions × 12)
₱35,000 case: ₱420,000 − (₱2,825 × 12 = ₱33,900) = ₱386,100Step 3: Handle the 13th month and other benefits
13th month pay, Christmas bonus and other benefits are exempt up to a combined ₱90,000. Add only the excess to taxable income. Also leave out de minimis benefits that are within their limits, since they are tax-free on their own.
Taxable excess = max(0, 13th month + bonuses + other benefits − ₱90,000)Step 4: Apply the TRAIN table
| Annual taxable income | Tax |
|---|---|
| Up to ₱250,000 | ₱0 |
| ₱250,000 to ₱400,000 | 15% of the excess over ₱250,000 |
| ₱400,000 to ₱800,000 | ₱22,500 + 20% of the excess over ₱400,000 |
| ₱800,000 to ₱2,000,000 | ₱102,500 + 25% of the excess over ₱800,000 |
| ₱2,000,000 to ₱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 |
Step 5: Convert to monthly
Monthly tax ≈ annual tax ÷ 12Your employer’s payroll shows a slightly different figure each month because it uses the withholding table on each payday’s taxable pay.
Worked examples at four salary levels
Example A: ₱20,000 a month
Annual gross ₱240,000
Contributions − ₱20,400
Taxable income ₱219,600 → below ₱250,000
Income tax ₱0Monthly taxable pay is ₱18,300, under the ₱20,833 exempt level, so the withholding tax is ₱0 as well. Take-home is ₱18,300 a month.
Example B: ₱35,000 a month
Annual gross ₱420,000
Contributions − ₱33,900
Taxable income ₱386,100 → 15% bracket
Income tax 15% × (₱386,100 − ₱250,000) = ₱20,415 per yearThat is about ₱1,701 a month, which matches the withholding on the monthly table: 15% × (₱32,175 − ₱20,833) = ₱1,701.30. Effective rate on gross pay: 4.9%.
Example C: ₱60,000 a month
Annual gross ₱720,000
Contributions − ₱41,400
Taxable income ₱678,600 → 20% bracket
Income tax ₱22,500 + 20% × (₱678,600 − ₱400,000) = ₱78,220 per yearMonthly withholding is ₱6,518.40, and take-home pay is about ₱50,031 a month. Effective rate on gross pay: 10.9%.
Example D: ₱100,000 a month, with the 13th month twist
Annual gross ₱1,200,000
Contributions − ₱53,400
13th month ₱100,000 − ₱90,000 exempt = ₱10,000 taxable
Taxable income ₱1,200,000 − ₱53,400 + ₱10,000 = ₱1,156,600 → 25% bracket
Income tax ₱102,500 + 25% × (₱1,156,600 − ₱800,000) = ₱191,650 per yearWithout the 13th month excess the tax would be ₱189,150, so the extra ₱10,000 costs ₱2,500. This is the usual reason high earners see a tax bump in December.
Quick check with the withholding table
You can sanity check any example against the monthly withholding table:
| Monthly taxable pay | Monthly withholding |
|---|---|
| ₱18,300 | ₱0 |
| ₱32,175 | ₱1,701.30 |
| ₱56,550 | ₱6,518.40 |
| ₱95,550 | ₱15,762.55 |
Multiply by 12 and compare with the annual tax. A small difference is normal because of rounding in the BIR table.
If you started or left mid-year
Only count months you worked. A ₱30,000 a month employee hired in March has 10 months of pay, so taxable income is 10 × ₱27,550 = ₱275,500 and annual tax is 15% × ₱25,500 = ₱3,825, even though payroll withheld ₱1,007.55 for ten months (₱10,075.50). The difference of ₱6,250.50 comes back as a refund.
If you are a freelancer
Freelancers use two routes: graduated rates on net income (gross less expenses or a 40% optional standard deduction), or 8% of gross above ₱250,000 if receipts are ₱3,000,000 or less. With ₱600,000 of receipts and few costs, 8% gives ₱28,000 against ₱62,500. See the income tax calculator to compare both, and the ITR guide for which form to file.
Common mistakes
- Using gross salary instead of taxable income.
- Forgetting that the first ₱250,000 is exempt, then taxing the whole income at 15%.
- Applying the top rate to everything. Each rate applies to its slice.
- Dividing by 12 and using the monthly bracket with annual numbers, or the reverse. Keep monthly with monthly and annual with annual.
- Treating the full 13th month as taxable. Only the excess above ₱90,000 counts.
Related guides
- Income tax in the Philippines: complete guide →
- Tax Table 2026: all BIR tables →
- How withholding tax works →
- Is 13th month pay taxable? →
Source: Bureau of Internal Revenue (BIR), RA 10963 (TRAIN) and RR 11-2018 Annex E. Contribution figures use the 2026 SSS, PhilHealth and Pag-IBIG rates. For estimation only; confirm with the BIR or your HR.