How to Compute Income Tax in the Philippines (2024 Guide)

Here’s the quickest way how to compute income tax in the Philippines. Whether you’re employed, self-employed, or a professional taxpayer, filing your income tax return (ITR) is mandatory.

It can be quite confusing to start the computation of your taxable income because there are different factors to consider in generating tax dues and tax credits. The types of taxpayers, allowable deductions, income sources, and other factors make it easy to let your taxes slip through the cracks.

No worries because this article provides a step-by-step breakdown of how to calculate your income tax payment using the latest BIR Tax Rates in 2024 (New Income Tax Table in 2024).

Table of Contents:

What is Income Tax?

Income tax is a type of tax imposed on individuals’ or entities’ income. Its purpose is to redistribute wealth and finance government projects. Tax payment of a person or company depends on their income level, salary, property value, assets, and other financial resources.

What is Income Tax Return in the Philippines?

An Income Tax Return (ITR) is a document that you will file at the Bureau of Internal Revenue (BIR) to declare your income and pay the corresponding tax. ITR is also known as Income Tax Declaration, Income Tax Filing, or the necessary BIR Form you must file every taxable year.

Who are Required to File Income Tax Return in the Philippines?

According to the Tax Code of the Philippines, the following must file Income Tax Returns (ITR):

Individual taxpayers