Philippine Tax Tables 2025: TRAIN Law Complete Guide
Complete guide to Philippine income tax rates for 2025 under TRAIN law. Tax brackets, ₱250k exemption, sample calculations included.
TRAIN Law Overview
The Tax Reform for Acceleration and Inclusion (TRAIN) Law, implemented in 2018, introduced significant changes to the Philippine tax system. The most notable change for employees is the ₱250,000 annual tax exemption for those earning below this threshold.
2025 Income Tax Table
The following tax rates apply to taxable compensation income for 2025:
| Annual Taxable Income | Tax Rate | Tax Due on Excess |
|---|---|---|
| ₱250,000 and below | 0% | ₱0 |
| Over ₱250,000 to ₱400,000 | 15% | ₱0 + 15% of excess over ₱250,000 |
| Over ₱400,000 to ₱800,000 | 20% | ₱22,500 + 20% of excess over ₱400,000 |
| Over ₱800,000 to ₱2,000,000 | 25% | ₱102,500 + 25% of excess over ₱800,000 |
| Over ₱2,000,000 to ₱8,000,000 | 30% | ₱402,500 + 30% of excess over ₱2,000,000 |
| Over ₱8,000,000 | 35% | ₱2,202,500 + 35% of excess over ₱8,000,000 |
Understanding the ₱250,000 Exemption
Great News for Lower-Income Earners!
If your annual gross income is ₱250,000 or below (approximately ₱20,833/month), you pay ZERO income tax.
This means you only pay SSS, PhilHealth, and Pag-IBIG contributions. No withholding tax!
Sample Tax Calculations
Example 1: Below the Exemption Threshold
Annual Income: ₱240,000 (₱20,000/month)
Tax Calculation:
- Since ₱240,000 < ₱250,000, the entire amount is EXEMPTED
- Annual Tax Due: ₱0
- Monthly Withholding Tax: ₱0
Example 2: Just Above the Threshold
Annual Income: ₱360,000 (₱30,000/month)
Tax Calculation:
- Taxable Income: ₱360,000 - ₱250,000 = ₱110,000
- Tax Due: ₱0 + (15% × ₱110,000) = ₱16,500
- Monthly Withholding Tax: ₱1,375
Example 3: Mid-Range Salary
Annual Income: ₱600,000 (₱50,000/month)
Tax Calculation:
- Exempt first ₱250,000, next ₱150,000 taxed at 15% = ₱22,500
- Remaining ₱200,000 taxed at 20% = ₱40,000
- Total Annual Tax: ₱62,500
- Monthly Withholding Tax: ₱5,208
Special Rules and Deductions
13th Month Pay and Other Benefits
Remember that 13th month pay and other benefits are tax-exempt up to ₱90,000 per year. This is separate from your regular salary exemption.
8% Tax Option for Self-Employed
Self-employed individuals and professionals with gross sales/receipts not exceeding ₱3 million may opt for an 8% tax on gross sales/receipts in lieu of the graduated income tax rates and percentage tax.
Withholding Tax Computation
Employers compute monthly withholding tax using the following formula:
Monthly Withholding Tax Formula:
- Annualize the monthly basic salary
- Add all taxable allowances and benefits
- Subtract the ₱250,000 exemption
- Apply the appropriate tax rate per bracket
- Divide by 12 to get monthly withholding
Common Tax Mistakes
- Not claiming the ₱250k exemption - Many employees below this threshold still have tax withheld
- Forgetting the ₱90k benefit exemption - 13th month pay up to ₱90k is tax-free
- Mixing up gross vs taxable income - Deduct mandatory contributions first
- Incorrect annualization for mid-year hires - Pro-rate the exemption
Year-End Adjustment
Employers must perform a year-end tax adjustment to reconcile the actual annual tax due versus the total tax withheld. This may result in either a tax refund or additional tax payable by the employee. This appears on BIR Form 2316.