Philippines

Individual - Sample personal income tax calculation

Last reviewed - 20 December 2019

Typical tax computation for 2019

Assumptions

  • Resident alien husband and wife with two dependent children.
  • Salary and allowances of husband arising from employment: Salary of PHP 652,000, living allowances of PHP 100,000, and housing benefits (100%) of PHP 300,000.
  • Teaching salary of wife: PHP 68,000.
  • Gross dividend income from investment in shares of stock of a domestic corporation of PHP 10,000.
  • Interest of PHP 20,000 on peso bank account.
  • Capital gain on sale of shares of PHP 5,000.
  • Taxes withheld by employer of husband at PHP 118,000 and by employer of wife at nil.
  • Husband is occupying a managerial position in the company.
Tax computation Husband (PHP) Wife (PHP)
Gross income:    
Salary (1) 652,000 68,000
Living allowances 100,000  
Total taxable income 752,000 68,000
     
Tax due:    
On first 400,000 30,000  
On remainder of 352,000 at 25% 88,000  
On first 250,000   0
Total tax 118,000 0
     
Less:    
Tax withheld by employer per Form 2316 (2) (118,000) 0
     
Net tax due 0 0

 Notes

The following items were not included in the income tax return because they are subject to final tax:

Interest on peso bank account 20,000
Capital gain on sale of shares 5,000
Dividend income 10,000
Housing benefit (3) 300,000
  1. Philippine social tax contributions, if any, made by the resident alien and/or his wife to the Philippine social security agencies shall be allowed as deductions from gross income in calculating their tax liabilities for the year.
  2. For individuals receiving salary and other allowances from one employer only, the tax due is usually equal to tax withheld since the employer is required to compute and withhold the total tax due on the employee's compensation earned during the year, using the annual graduated income tax table, before paying the last payroll for the year.
  3. As a managerial employee, the housing benefit provided to the husband shall be subject to FBT rather than income tax.

The above individual tax calculation also applies to non-resident aliens engaged in trade or business in the Philippines for their Philippine-source income.