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Friday, April 19, 2024

DOF: Tax cuts await low-income earners in January

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MAJORITY of taxpayers will receive further personal income tax cuts beginning January 1, pursuant to Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law, which adjusted personal income tax rates.

“The TRAIN law adjusted personal income taxes and fixed the inequity of our tax system. We want our taxpayers to reap the fruits of their labor while enabling them to contribute their fair share to national development,” Finance Secretary Benjamin Diokno said.

Individuals with an annual taxable income below P250,000 are still exempted from paying personal income taxes under the adjusted tax rates.

For those earning not over P400,000, there will be tax of 15 percent of the excess of over P250,000.

For those earning not over P800,000 there will be tax of P22,500 plus 20 percent of the excess of over P400,000.

For those earning not over P2 million, there will be tax of P102,500 plus 25 percent of excess of over P800,000.

For those earning P8 million, there will be tax of P402,500 plus 30 percent of the excess of P2 million, and those earning over P8 million, they will be taxed P2.2 million and 35 percent of the excess of P8 million.

The revised tax schedule beginning January 1, 2023 reduces personal income taxes for those earning P8 million and below,  compared to the initial tax cuts for January 1, 2018 to December 31, 2022.

Meanwhile, to maintain the progressivity of the tax system, the tax rate for individuals earning P8 million and above annually will be maintained at 35 percent, the DOF said.

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