Withholding Tax Table 2026 Philippines: BIR Rates and Payroll Guide

Payroll management in the Philippines relies on the BIR tax table Philippines, which determines how employee compensation is taxed and reported. This BIR tax table supports accurate salary calculations and compliance with Bureau of Internal Revenue regulations. Businesses should always follow current official BIR guidance.

For HR teams, accountants, and business owners, understanding the BIR tax table is essential for applying the correct withholding rates under the TRAIN Law. Businesses should monitor updated BIR issuances and verify their effective dates before changing payroll calculations. It also requires awareness of tax frameworks such as the TRAIN Law, which continues to shape payroll taxation. For example, BIR Revenue Regulation No. 5 updates withholding tax rates under the National Internal Revenue Code.

What Is the BIR Withholding Tax Table 2026 in the Philippines?

The BIR withholding tax table 2026 is the payroll guide employers use to determine how much income tax should be deducted from an employee’s taxable compensation and remitted to the Bureau of Internal Revenue (BIR). It applies to: 

• Employees whose taxable income falls within the graduated income tax brackets.
• Exempt for lower-income earners and may have zero withholding if their taxable pay remains within the exempt threshold.

For compensation income, employers compute withholding tax after considering taxable salary and allowable deductions such as SSS, PhilHealth, and Pag-IBIG contributions. The amount withheld is not a separate payroll fee, but an advance collection of the employee’s income tax and is credited against their annual tax liability.

Types of Withholding Tax in the Philippines

The BIR applies three main types of withholding tax, and knowing which one applies helps businesses withhold and remit the correct amount. For payroll, the withholding tax table 2026 is used specifically for the first type below, while the other two cover different kinds of payments and income.

• Withholding Tax on Compensation (WTC): The type most relevant to employers. Tax is deducted from employees’ salaries and wages using the BIR graduated rates, and the amount withheld is credited against each employee’s annual income tax due.
• Expanded Withholding Tax (EWT): Applies to specific payments to individuals or businesses, such as professional fees, rentals, and commissions. The payor withholds tax at the prescribed rate and remits it to the BIR on the payee’s behalf.
• Final Withholding Tax (FWT): Covers mostly passive income like interest, dividends, and certain royalties. The rate is generally fixed and treated as final, so the tax withheld already settles the full tax due on that income.

BIR Withholding Tax Table (effective 2023 - Onwards)

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The 2026 withholding tax table still follows the TRAIN Law’s graduated rates effective from 2023 onward. Use the BIR withholding tax table below to find the prescribed withholding amount for the employee’s payroll frequency by matching the employee’s taxable compensation to the applicable daily, weekly, semi-monthly, or monthly range. 

These schedules help employers withhold the correct amount on time, support financial compliance, and ensure the government receives regular tax revenue throughout the year.

It reflects the TRAIN Law graduated rates, the annual exemption threshold, and the treatment of non-taxable compensation items.

• Mandatory deductions: SSS, PhilHealth, and Pag-IBIG are deducted first before tax is computed.
• Minimum wage earners: Minimum wage compensation remains exempt from withholding tax.
• Non-taxable benefits: 13th month pay and other benefits are exempt only up to the allowed annual limit, therefore any excess becomes taxable.

Self-Employed Individuals and Professionals

The withholding tax tables above apply to employees receiving compensation income. Self-employed individuals and professionals are generally taxed based on their net taxable income and may choose between the graduated income tax rates or, if eligible, the 8% income tax option.

The graduated rates use the Annual Income Tax Table above. Meanwhile, eligible non-VAT taxpayers with annual gross sales or receipts of not more than ₱3 million may opt for the 8% rate, subject to BIR registration and eligibility requirements.

How to Read the BIR tax table Philippines and Compute Withholding Tax

To use the BIR withholding tax table correctly, determine the employee’s taxable income, identify the applicable compensation range, and add the fixed base tax to the prescribed rate on the excess. The following steps demonstrate this calculation using monthly payroll examples.

1. Calculate taxable income

Taxable income is not the same as gross salary. Before finding the bracket, subtract the employee’s mandatory government contributions:

Taxable income = Gross monthly salary − (SSS employee share + PhilHealth employee share + Pag-IBIG employee share)

Contribution amounts are based on the applicable employee shares and maximum contribution bases. Actual payroll deductions may vary according to the employee’s compensation classification and current agency rules.

2. Find the compensation range

Match the taxable income to the appropriate row in the monthly BIR withholding tax table. Locate the compensation range containing the employee’s taxable income, then note its fixed base amount, lower limit, and applicable percentage rate.

3. Apply the formula

Each bracket row has two components: a fixed base tax and a percentage applied to the excess over the lower bracket limit.

Withholding tax = Base amount + (Rate × (taxable income − compensation level))

Calculation Component	Calculation	Amount
Taxable monthly income	Result from Step 1	₱195,550.00
Applicable monthly bracket	₱166,667 – ₱666,666	30% rate
Base amount	Fixed tax for the applicable bracket	₱33,541.80
Compensation level	Lower limit of the applicable bracket	₱166,667.00
Excess over compensation level	₱195,550 − ₱166,667	₱28,883.00
Tax on excess	30% × ₱28,883	₱8,664.90
Monthly withholding tax due	₱33,541.80 + ₱8,664.90	₱42,206.70

Withholding tax is calculated using the monthly BIR tax table effective January 1, 2023 onward and the sample taxable income shown above. Actual deductions may vary based on the payroll period, taxable supplementary compensation, payroll adjustments, and the employee’s applicable tax bracket.

Example 1: employee earning ₱25,000/month

1. Gross monthly salary: ₱25,000. Estimated contributions: SSS ₱1,250 + PhilHealth ₱625 + Pag-IBIG ₱100 = ₱1,975
2. Taxable income: ₱25,000 − ₱2,075 = ₱23,025
3. Bracket: ₱23,025 falls in the lower bracket (₱20,833 – ₱33,332). Base amount: ₱0
4. Excess over ₱20,833: ₱23,025 − ₱20,833 = ₱2,192. Apply 15%: ₱3,675 × 0.15 = ₱328.8

Monthly withholding tax due: ₱0 + ₱328.8 = ₱328.8

Example 2: employee earning ₱45,000/month

1. Gross monthly salary: ₱45,000. Estimated contributions: SSS ₱1,750 + PhilHealth ₱1,125 + Pag-IBIG ₱100 = ₱2,975
2. Taxable income: ₱45,000 − ₱2,975 = ₱42,025
3. ₱42,025 falls in bracket 3 (₱33,333 – ₱66,666). Base amount: ₱1,875.00
4. Excess over ₱33,333: ₱42,025 − ₱33,333 = ₱8,692. Apply 20%: ₱8,692 × 0.20 = ₱1,738.40

Monthly withholding tax due = ₱1,875.00 + ₱1,738.40 = ₱3,613.40

Example 3: employee earning ₱200,000/month

1. Gross monthly salary: ₱200,000. Estimated contributions: SSS ₱1,750 + PhilHealth ₱2,500 + Pag-IBIG ₱100 = ₱4,350
2. Taxable compensation: ₱200,000 − ₱4,350 = ₱195,650
3. Applicable Bracket: ₱166,667 to ₱666,666. Base withholding tax: ₱33,541.80
   
4. Excess over ₱166,667: ₱195,650 − ₱166,667 = ₱28,983. Tax on excess: ₱28,883 x 30% = ₱8,694.90

Monthly withholding tax due: ₱33,541.80 + ₱8,694.90 = ₱42,236.70 

For a broader annual view, refer to the Annual Income Tax Table above. Using a payslip system helps employers present gross pay, mandatory deductions, taxable income, and withholding tax in one clear salary record.

As these examples show, applying the correct BIR bracket, contribution rates, and excess computations by hand gets slower and riskier as your workforce grows. An automated payroll system applies the correct BIR tax table 2026 automatically, keeps computations consistent, and reduces payroll errors before they reach your employees.

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Mandatory Contributions Before Calculating Withholding Tax

While the BIR tax table determines withholding tax, a complete payroll calculation also requires accurate deduction and remittance of mandatory contributions to SSS, PhilHealth, and Pag-IBIG. These contributions matter for the BIR tax table specifically because they reduce the employee’s taxable income before you apply the bracket.

Estimated 2026 employee contribution rates:

Agency	Employee Share	Employer Share	Basis
SSS	5% of MSC	10% of MSC	Monthly Salary Credit (₱5,000–₱35,000 range)
PhilHealth	2.5% of basic salary	2.5% of basic salary	Subject to income floor and ceiling
Pag-IBIG	2% of monthly compensation	2%	Employee max contribution: ₱200/month

Always verify current rates directly: SSS · PhilHealth · Pag-IBIG Fund. Rates are subject to change.

MSC Bracket Examples:

• ₱5,000 MSC: Employee share = ₱250, Employer share = ₱500
• ₱10,000 MSC: Employee share = ₱500, Employer share = ₱1,000
• ₱15,000 MSC: Employee share = ₱750, Employer share = ₱1,500
• ₱20,000 MSC: Employee share = ₱1,000, Employer share = ₱2,000
• ₱35,000 MSC: Employee share = ₱1,750, Employer share = ₱3,500

This example illustrates how MSC affects both employee and employer contributions.

Timely remittance of these contributions is legally required. Penalties apply to both late and incorrect remittances. Integrating contribution computation into your payroll system ensures correct net pay and full statutory compliance.

How Payroll Software Helps with BIR Compliance

Manually calculating payroll becomes slower and more error-prone as your workforce grows, especially when the BIR tax table Philippines, contribution rates, and employee details change. An integrated HR and accounting system applies the correct BIR tax table 2026 brackets, computes mandatory contributions, produces accurate payslips, and supports reliable alphalist preparation for annual reporting.

1. Keep Payroll Data in One Place

A modern system stores all employee data such as personal information, salaries, attendance, and leave into a single database. Payroll is processed automatically using the most up-to-date information, eliminating manual data entry and the inconsistencies that come with it.

2. Calculate Tax and Contributions Automatically

Payroll software automatically updates BIR tax tables and contribution schedules, adjusts for bonuses, overtime, and other variable pay, and generates the necessary compliance documents including BIR Form 2307 (Certificate of Creditable Tax Withheld at Source) and BIR Form 2316. Calculation errors that trigger under- or over-withholding are eliminated.

3. Prepare Payroll and Compliance Reports

Automated systems produce payroll summaries, remittance reports, and annual tax forms ready for audits and management decisions. Integration with accounting ensures accurate general ledger entries, simplifying financial tracking and statutory reporting.

Conclusion

Understanding the BIR tax table Philippines and mandatory employee contributions is essential for businesses operating in the Philippines. Staying current with the BIR tax table, TRAIN Law rates, and agency contribution schedules supports accurate payroll, regulatory compliance, and employee trust.

Manual payroll is error-prone and time-consuming, especially as a workforce grows. Automating tax calculations through an integrated payroll system centralises employee data, applies the correct BIR bracket automatically, computes mandatory contributions, and generates the reports your compliance team needs all in one place. If you are evaluating your options, see our guide to payroll software in the Philippines to understand what features matter most for BIR compliance and scalability.

FAQ for BIR Tax Table