How much more spending money will you have in 2018 because of the recently enacted tax reform law? Below is a table showing how much additional disposable income a typical private-sector employee will have under the new income-tax rules (all figures in pesos).
| Monthly Salary | Old Income Tax | New Income Tax | Added Spending Money |
| 21,000 | 2,924 | 0 | 2,924 |
| 22,000 | 3,171 | 37 | 3,134 |
| 23,000 | 3,417 | 234 | 3,183 |
| 24,000 | 3,664 | 431 | 3,233 |
| 25,000 | 3,910 | 628 | 3,282 |
| 30,000 | 5,339 | 1,615 | 3,724 |
| 35,000 | 6,818 | 2,626 | 4,192 |
| 40,000 | 8,297 | 3,859 | 4,438 |
| 45,000 | 9,797 | 5,109 | 4,688 |
| 50,000 | 11,356 | 6,359 | 4,997 |
| 55,000 | 12,956 | 7,609 | 5,347 |
| 60,000 | 14,556 | 8,859 | 5,697 |
| 65,000 | 16,156 | 10,109 | 6,047 |
| 70,000 | 17,756 | 11,464 | 6,292 |
| Source: taxcalculator.ph | |||
Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, from January 1, 2018, employees with an annual income of ₱250,000 or less will be exempt from income tax, while those earning ₱2 million or less per year will enjoy lower income-tax rates. In addition, 13th month pay and bonuses up to ₱90,000 will be tax-free.
However, while lowering income-tax rates, TRAIN increases the taxes on fuel, cars, coal, and sugar-sweetened drinks, which is certain to cause higher prices for these and related products. Will the resulting increase in prices simply nullify the additional take-home pay gained from the tax reform? That remains to be seen.
The above table is based on results from the Department of Finance (DOF) Tax Calculator. ABS-CBN News also offers a similar calculator, the Pinoy Tax Reform Calculator.
If you want a detailed computation you can use the online withholding tax calculator provided by the Bureau of Internal Revenue (BIR), the BIR Tax Calculator, which includes additional inputs, such as allowances, night differential, holiday pay, and more.
Labels: Employment, Misc