As an employee in the Philippines, it is important to know how to calculate your taxable salary. This way, you can be sure that you are paying the correct amount of tax. The good news is that it is not as difficult as you might think. In this blog post, we will walk you through the steps of how to calculate your taxable salary in the Philippines.
Income Tax Rates in the Philippines
The first step in calculating your taxable salary is to determine your income tax rate. Income tax rates in the Philippines vary depending on your annual income. For example, if your annual income is less than PHP250,000, your income tax rate will be 20%. However, if your annual income is more than PHP8 million, your income tax rate will be 32%. You can use this income tax calculator to determine your exact income tax rate.
Deductions from Your Taxable Salary
Once you have determined your income tax rate, you can then start to calculate your deductions. The standard deduction in the Philippines is PHP40,000. This means that if your annual income is less than PHP250,000, your taxable salary will be 20% of (your annual income minus PHP40,000). However, if your annual income is more than PHP8 million, your taxable salary will be 32% of (your annual income minus PHP40,000). In addition to the standard deduction, there are also a number of other deductions that you may be eligible for. These include deductions for health insurance premiums, charitable donations, and interest on home loans. You can learn more about these deductions here.
Calculating your taxable salary in the Philippines is not as difficult as it may seem at first glance. By following the steps outlined in this blog post, you can easily determine how much tax you owe. Remember to take into account your income tax rate and any deductions that you may be eligible for when calculating your taxable salary.