Philippines Income Tax Rates: Personal, Capital Gains and Corporate Tax
A practical guide to Philippine individual income tax, capital gains, withholding and corporate income tax, including the historical pre-TRAIN rates for 2017 and the reformed rates effective from 2018.
Important: The original article covers 2017-2018, a period spanning two different tax regimes. Pre-TRAIN individual rates applied through 31 December 2017; TRAIN rates took effect on 1 January 2018. The current graduated schedule applies from 1 January 2023. These schedules must not be combined.
Legal framework and definitions
The principal legislation is the National Internal Revenue Code of 1997 (NIRC), as amended. Republic Act No. 10963 (TRAIN) changed individual rates from 2018; Republic Act No. 11534 (CREATE) revised corporate taxation; Republic Act No. 12066 (CREATE MORE) amended certain corporate incentives; and Republic Act No. 12214 (Capital Markets Efficiency Promotion Act) amended certain investment taxation rules in 2025. Consult the BIR Tax Code and Bureau of Internal Revenue for consolidated guidance.
Taxable income generally means gross income less deductions and exclusions allowed under the NIRC. Resident citizens are generally taxed on worldwide income; nonresident citizens and aliens are generally taxed on Philippine-source income, with different treatment according to status and income type (NIRC sections 23-25). A capital asset is generally property other than inventory, property held primarily for sale to customers, and property used in trade or business of a depreciable or real-property character (section 39).
Current individual income tax rates (2023 onwards)
Under NIRC section 24(A), as amended by TRAIN, the following annual graduated rates apply to taxable income subject to the regular individual schedule. The second column states the total tax formula, not a flat rate on the entire income.
| Annual taxable income (PHP) | Income tax due |
|---|---|
| Up to PHP 250,000 | 0 |
| Over 250,000 to 400,000 | 15% of excess over 250,000 |
| Over 400,000 to 800,000 | PHP 22,500 + 20% of excess over 400,000 |
| Over 800,000 to 2,000,000 | PHP 102,500 + 25% of excess over 800,000 |
| Over 2,000,000 to 8,000,000 | PHP 402,500 + 30% of excess over 2,000,000 |
| Over 8,000,000 | PHP 2,202,500 + 35% of excess over 8,000,000 |
For example, PHP 500,000 of annual taxable income under the regular schedule produces PHP 22,500 + 20% of PHP 100,000, or PHP 42,500 before applicable credits. Employees normally have tax withheld by their employers; certain self-employed individuals may qualify to elect an 8% tax on eligible gross sales/receipts in lieu of graduated income tax and percentage tax, subject to statutory conditions.
Historical individual income tax rates: 2017 and 2018
Calendar year 2017 (before TRAIN): Section 24(A) of the NIRC, before amendment by Republic Act No. 10963, applied the following progressive annual tax formula to taxable income of individuals subject to the regular schedule. The amount before the plus sign is the base tax due on the lower brackets.
| Annual taxable income (PHP) | Income tax due in 2017 |
|---|---|
| Up to PHP 10,000 | 5% of taxable income |
| Over 10,000 to 30,000 | PHP 500 + 10% of excess over 10,000 |
| Over 30,000 to 70,000 | PHP 2,500 + 15% of excess over 30,000 |
| Over 70,000 to 140,000 | PHP 8,500 + 20% of excess over 70,000 |
| Over 140,000 to 250,000 | PHP 22,500 + 25% of excess over 140,000 |
| Over 250,000 to 500,000 | PHP 50,000 + 30% of excess over 250,000 |
| Over 500,000 | PHP 125,000 + 32% of excess over 500,000 |
Calendar year 2018 (TRAIN reform): Republic Act No. 10963 amended section 24(A), replacing the 2017 brackets from 1 January 2018. The following rates applied from 2018 through 2022, and should be used for 2018 income instead of the 2017 schedule.
| Annual taxable income (PHP) | Income tax due in 2018 |
|---|---|
| Up to PHP 250,000 | 0 |
| Over 250,000 to 400,000 | 20% of excess over 250,000 |
| Over 400,000 to 800,000 | PHP 30,000 + 25% of excess over 400,000 |
| Over 800,000 to 2,000,000 | PHP 130,000 + 30% of excess over 800,000 |
| Over 2,000,000 to 8,000,000 | PHP 490,000 + 32% of excess over 2,000,000 |
| Over 8,000,000 | PHP 2,410,000 + 35% of excess over 8,000,000 |
Historical deductions, exemptions and withholding treatment depend on the applicable tax year and taxpayer classification. The source page listed professional-fee withholding of 10% or 15%, nonemployee directors' fees at 20% and nonindividual professional fees at 20%; these figures should be treated as archived summaries rather than universal rates, and verified against the BIR regulations in force for the particular transaction.
Capital gains tax in the Philippines
Sale of real property held as a capital asset
Under NIRC section 24(D)(1), a 6% final capital gains tax generally applies to the sale of Philippine real property classified as a capital asset by an individual, computed on the higher of the gross selling price or fair market value determined under applicable rules. It is not a general 6% tax on all capital gains. Sales of real property held as an ordinary business asset follow different rules. Certain principal-residence transfers may qualify for exemption when statutory conditions are met.
The seller generally bears the capital gains tax, although the parties may agree contractually who remits the amount; documentary and filing requirements still apply. See BIR Form 1706 instructions.
Sale of unlisted shares
Capital gains on shares not traded through a local or foreign stock exchange may be subject to a 15% final tax on net gains under the relevant amended NIRC provisions. Listed shares and other investments may have separate transaction taxes and exemptions; check the amendments introduced by the 2025 Capital Markets Efficiency Promotion Act and the relevant BIR rules before computing tax.
Withholding tax on professional fees and other payments
Withholding tax is a collection mechanism under NIRC sections 57-58. The applicable rate depends on the payee, payment type, classification, registration and current BIR regulations. For example, professional fees may be subject to different expanded withholding tax rates depending on the payee's annual gross income and prescribed declarations. Dividend, interest, royalty, director-fee and nonresident payments may be subject to distinct final or creditable withholding rates.
The older blanket 10%, 15% and 20% figures are not reliable as a universal 2026 table. Use the BIR tax information and current withholding regulations for the particular transaction.
Corporate income tax: current and 2017-2018 rates
| Company category / period | General rate or treatment |
|---|---|
| Domestic corporations - regular rate (current) | 25% of taxable income |
| Qualifying small domestic corporations (current) | 20% if taxable income does not exceed PHP 5 million and total assets do not exceed PHP 100 million, subject to statutory conditions |
| Resident foreign corporations (current) | Generally 25% on taxable Philippine-source income |
| Domestic and resident foreign corporations, 2017-2018 | Generally 30% under the pre-CREATE rules |
| Registered business enterprises | May qualify for special incentives under CREATE and CREATE MORE, subject to registration and eligibility |
The current rates are generally governed by NIRC sections 27 and 28, as amended by CREATE. A minimum corporate income tax may apply under the statutory conditions, and special industries may have different rules. For incentive-registered entities, consult the BIR CREATE MORE guidance. Do not apply the 2017-2018 general 30% rate to a current tax year without checking the applicable law.
Filing, residency and compliance
- Individual returns: BIR Form 1700, 1701 or 1701A may apply depending on the nature of income; business taxpayers may have quarterly filings.
- Corporate returns: BIR Forms 1702 series generally apply, with quarterly and annual filing obligations.
- Property sales: BIR Form 1706 is generally filed within 30 days after the taxable transfer, subject to applicable special rules.
- Nonresidents: Treaty relief, source rules and withholding obligations require transaction-specific review.
Official legislation and resources
- BIR - National Internal Revenue Code
- BIR - Revenue Regulations 8-2018 (TRAIN)
- BIR - CREATE MORE corporate tax guidance
- BIR - Official tax forms
- BIR - Tax information by category
This article provides general information as of 23 October 2026. Tax treatment depends on income classification, taxpayer residency, available exemptions and subsequent BIR issuances. Check the current official rules before filing.