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2018 Personal Income Tax Rate Changes

The new personal income tax rates implemented by the Bureau of Internal Revenue on January 1, 2018 streamlined the income tax brackets to six rates, adjusted the taxable income threshold upwards for each bracket, revised the tax rates for each bracket, raised the annual gross income threshold for tax exemption, and removed personal and additional exemptions for dependents that were previously available. Under the new reform, individuals earning 250,000 pesos or less annually are exempt from income taxes, compared to only minimum wage earners previously.

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Ian Eldrick Dela Cruz
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41 views1 page

2018 Personal Income Tax Rate Changes

The new personal income tax rates implemented by the Bureau of Internal Revenue on January 1, 2018 streamlined the income tax brackets to six rates, adjusted the taxable income threshold upwards for each bracket, revised the tax rates for each bracket, raised the annual gross income threshold for tax exemption, and removed personal and additional exemptions for dependents that were previously available. Under the new reform, individuals earning 250,000 pesos or less annually are exempt from income taxes, compared to only minimum wage earners previously.

Uploaded by

Ian Eldrick Dela Cruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

The new personal income tax rates are now in effect starting January 1,

2018 after the approval of the TRAIN tax reform.


Compared to the old tax rates which were in use until the end of 2017,
the new tax rates implemented by the Bureau of Internal Revenue
(BIR):

1. streamlined the income tax brackets and reduced the brackets to six (6);
2. adjusted upwards the taxable income threshold per bracket;
3. revised the tax rate charged on each taxable income bracket;
4. raised the annual gross income eligible for tax exemption; and
5. removed the personal exemption (P50,000) and additional exemptions
(maximum of P100,000 if taxpayer has four dependents)
Under the new income tax reform, salaried individuals earning gross
compensation of P250,000 or below per year are exempted from
paying income taxes. This is a drastic change from the past, wherein
only the minimum wage earners were exempted.
In addition, the new BIR tax reform removed the personal exemption —
amounting to P50,000 — and additional exemption of P25,000 per
qualified dependent — maximum of 4 dependents, so maximum of
P100,000 additional exemptions — enjoyed by taxpayers in the old
system.

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