Personal Income Tax Train Law

These are the things you should know before filing your income tax this year under TRAIN law 2018. This article will discuss the new income tax rates and other updates regarding individual tax rate train law 2018. If you are a student who is studying taxation, these things will help you to understand the new personal income tax train law in the Philippines under the RA 10963 otherwise Known as the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

What is the New Income Tax Rate for Income Tax under Train Law?

Personal and Additional Exemption under Train Law

You might be wondering if you can still avail personal of 50, 000 and additional exemption of 25, 000 per dependent up to 4 dependent children (Section 35 of the 1997 Tax Code)? Well, under this new income tax law, it removed such exemptions and were replaced with the first 25, 000 of taxable income which is now subject to zero percent (0%) rate of income tax or non-taxable.

Whether you are single, married or with children, it does not matter with the new income tax rate.

SSS, Phil health, Pag-ibig Still Deductible

There is no change in the mandatory deductions from the gross compensation of a taxpayer. These allowed deductions must be the employee’s share in the GSIS, SSS, PhilHealth and Pag-ibig contributions and union dues should be limited to compulsory contributions.

De minimis Benefits under TRAIN law

With regard to the de minimis benefits, there is no change in the tax treatment.  It is still considered as compensation not subject to income tax and consequently, not subject to fringe benefits tax and withholding tax.

For the updated list of de-minis benefits, click this link: De minimis benefits under TRAIN law.

Any benefits received from the employer beyond the de minimis benefits rate will be included too as part of the other benefits which is subject to the ceiling amount of 90, 000. Therefore, any excess beyond the ceiling amount will be taxable and subject to withholding tax on compensation.

Any incentives received from the employer shall form part of the compensation subject to income tax if there is no special law exempt and the nature of the incentives qualify as de minimis benefits.

Premium Health Card Given by the Employer

If the employee (either rank and file or managerial) receives Premium Health Card under group insurance shall be included as part of the other benefits which is subject to 90, 000 ceiling thresholds. However, any employee holding managerial/supervisory rank receives other than group insurance will be subject to fringe benefits tax.

Additional Income Under Attrition Law

Any additional income or benefits earned by the employee in any form shall form part of the compensation income subject to withholding tax on compensation. The amount to be included in the taxable compensation should be the fair market value.

Commissions in Addition to the Regular Compensation

Any commission receives by the employee from the same employer shall be considered as a supplementary income or other taxable income. It is part of the regular compensation subject to income tax and to withholding tax using the withholding tax table on compensation.

Revised Withholding Tax In the Philippines 2019

withholding tax train law

This tax withheld shall be filled monthly and remitted using BIR Form No. 1601-C. To know your personal income tax, you may read on how to use the tax calculator.

Wrapping Up

There are many changes made on personal income tax because of this new reform tax law. It decreases the tax rates and the amount exempted from the personal tax made it higher from 1o, 000 to 250, 000. Also, the personal and additional exemptions were removes under train law which is from part of the exempted amount.

If you have other thoughts on this article, feel free to share with us your thoughts.

About Rosben Orbeso Murillo, CPA

-ONLINE FREELANCE Studied at Saint Paul School of Professional Studies Work Experiences: Taught both Accounting and Taxation for more than six (6) years. Former Tax CPA reviewer at SPSBL CPA review center.

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