BIR income tax rates in the Philippines for 2026 and how to read the tax table.
The income tax rates in the Philippines have been stable since the full implementation of the TRAIN Law (Republic Act 10963), which took effect in phases starting 2018 and reached its final rate structure in 2023. In 2026, these rates remain in effect. This guide explains what the tax table actually means, how to use it to estimate what you owe, and what the 8% flat rate option means for self-employed individuals.
Who pays income tax in the Philippines.
All individuals earning income within the Philippines are subject to income tax unless specifically exempt. This includes employed individuals (whose taxes are withheld by their employer), self-employed individuals and professionals, mixed-income earners (those with both employment and business or professional income), and non-resident aliens earning income within the Philippines. Minimum wage earners are exempt from income tax. OFWs are generally exempt from Philippine income tax on their foreign-sourced income.
The graduated income tax table for 2026.
The graduated tax rates that apply to compensation income and to self-employed individuals who do not opt for the 8% flat rate are as follows. Income of P250,000 and below per year: 0% – no tax. Income above P250,000 up to P400,000: 15% on the excess over P250,000. Income above P400,000 up to P800,000: P22,500 plus 20% on the excess over P400,000. Income above P800,000 up to P2,000,000: P102,500 plus 25% on the excess over P800,000. Income above P2,000,000 up to P8,000,000: P402,500 plus 30% on the excess over P2,000,000. Income above P8,000,000: P2,202,500 plus 35% on the excess over P8,000,000. These rates apply to taxable income, which is gross income minus allowable deductions.
How to read the table – a simple example.
Say your annual taxable income is P600,000. This falls in the bracket above P400,000 up to P800,000. Your tax is P22,500 (the fixed amount for that bracket) plus 20% of the excess over P400,000. The excess is P600,000 minus P400,000 which equals P200,000. Twenty percent of P200,000 is P40,000. Total income tax: P22,500 plus P40,000 equals P62,500 for the year. If you are employed, your employer withholds this throughout the year and you confirm or adjust when you file your annual ITR.
The 8% flat tax option for self-employed individuals.
Self-employed individuals and professionals whose gross annual sales or receipts do not exceed P3,000,000 may opt to pay a flat 8% income tax on gross sales or receipts in excess of P250,000, in lieu of the graduated rates and the 3% percentage tax. This option simplifies the computation significantly – you do not need to track deductible expenses because there are no itemized or optional standard deductions under the 8% scheme. You simply pay 8% on everything you earn above P250,000. This option must be elected at the beginning of the taxable year or on your first quarterly return as a new registrant.
Deductions under the graduated rate system.
If you are under the graduated rate system as a self-employed individual, you can reduce your taxable income through deductions. You have two choices: the Optional Standard Deduction (OSD), which is 40% of gross sales or receipts with no need to document individual expenses, or itemized deductions, which require detailed records of actual allowable business expenses. Most self-employed individuals find the OSD simpler unless their actual documented expenses exceed 40% of gross income.
Where to confirm current rates.
The BIR website at bir.gov.ph publishes the official tax tables and Revenue Regulations. For the most current and authoritative version of the tax table, go to bir.gov.ph and look under the Tax Information section. Rates can be updated by new Revenue Regulations or amendments to the TRAIN Law, so verify before filing if you are unsure whether anything has changed since your last filing period.
For more practical guides on BIR and government processes in the Philippines, visit the Tutorial Hub.
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