R.A. 10963 (Tax Reform for Acceleration and Inclusion Act) revised income tax brackets effective 2023 onwards. This guide covers monthly withholding tax computation for Philippine employers.
| Monthly Taxable Income (₱) | Rate | Tax Due |
|---|---|---|
| 0 – 20,833 | 0% | 0 |
| 20,834 – 33,332 | 20% | 0 + 20% of excess over ₱20,833 |
| 33,333 – 66,666 | 25% | 2,500 + 25% of excess over ₱33,333 |
| 66,667 – 166,666 | 30% | 10,833 + 30% of excess over ₱66,667 |
| 166,667 – 666,666 | 32% | 40,833 + 32% of excess over ₱166,667 |
| 666,667 and above | 35% | 200,833 + 35% of excess over ₱666,667 |
Source: BIR Revenue Regulations No. 11-2018, as amended. Amounts in Philippine Peso (₱).
Determine Gross Monthly Compensation
Include basic salary, regular allowances, commissions, and other taxable compensation.
Deduct Mandatory Government Contributions
Subtract the employee's SSS, PhilHealth, and Pag-IBIG contributions from gross compensation.
Deduct Other Non-Taxable Items
Identify and remove any de minimis benefits within exemption limits (rice allowance, clothing allowance, etc.).
Compute Monthly Taxable Income
Gross Compensation − Government Contributions − Non-taxable items = Monthly Taxable Income.
Apply Monthly Tax Table
Locate the applicable bracket and compute the tax due using the formula for that bracket.
Withhold and Remit
Withhold the computed tax from the employee's net pay and remit to BIR on the prescribed deadline.
| Item | Tax Treatment |
|---|---|
| SSS Contribution | Fully deductible from gross income before tax computation |
| PhilHealth Contribution | Fully deductible from gross income before tax computation |
| Pag-IBIG Contribution | Fully deductible from gross income before tax computation |
| 13th Month Pay | Exempt up to ₱90,000 per year (combined with other benefits) |
| Other Benefits / Bonuses | Exempt up to ₱90,000 per year (combined with 13th month pay) |
| De Minimis Benefits | Fully exempt (rice subsidy ₱2,000/mo, clothing allowance ₱6,000/yr, etc.) |
BIR Form 1601-C
Monthly Remittance Return of Income Taxes Withheld on Compensation
Due: On or before 10th day of following month (eFPS: 11th–15th)
BIR Form 1604-C
Annual Information Return of Income Taxes Withheld on Compensation
Due: On or before January 31 of the following year
BIR Form 2316
Certificate of Compensation Payment / Tax Withheld
Due: Issued to employees on or before January 31; filed with BIR by Feb 28
Alphalist
Alphabetical List of Employees
Due: Submitted with BIR Form 1604-C; includes all employees and income details
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