Income tax (rates / brackets)

# Philippines Income Tax Rates and Brackets

The Philippines imposes a progressive income tax system on resident and non-resident citizens, as well as foreign nationals earning Philippine-sourced income. As of 2024, individual income tax brackets range from 5% on the lowest tier to 35% on the highest, with taxable income divided into multiple brackets that determine the marginal rate applied to each portion of earnings.

The income tax framework covers compensation from employment, business income, investment returns, and other sources of gross income. Resident citizens are taxed on worldwide income, while non-residents and foreign nationals are taxed only on Philippine-sourced income. The system includes standard deductions and personal exemptions that reduce taxable income before rates are applied.

The Bureau of Internal Revenue (BIR), under the Department of Finance, administers income tax collection and enforcement under the National Internal Revenue Code (NIRC) of 1997, as amended. The tax code establishes the brackets, rates, and allowable deductions that govern individual taxation.

The Tax Reform for Acceleration and Inclusion (TRAIN) Law, effective January 1, 2018, restructured the income tax brackets and rates significantly, lowering rates for most taxpayers while broadening the tax base. Subsequent adjustments have been made to brackets and exemption thresholds to account for inflation and policy changes.

Employers and payroll teams must withhold income tax from employee compensation based on the applicable brackets and rates, remitting withheld amounts to the BIR monthly. Accurate classification of income type and proper application of deductions and exemptions are essential for compliance with Philippine income tax obligations.