2025 Philippines Tax Reform: TRAIN Law Update
The Tax Reform for Acceleration and Inclusion (TRAIN) Law, also known as Republic Act No. 10963, continues to shape the Philippine tax system. This legislation aims to simplify the country’s tax structure while promoting fairness. Its primary goal is to ease the tax burden on low-income earners and increase government revenue for infrastructure and social services.
Effective January 1, 2025, the Bureau of Internal Revenue (BIR) will implement the updated tax rates under this law.
- Income up to PHP 250,000: Exempt from tax.
- Income between PHP 250,001 and PHP 400,000: 15% on the excess over PHP 250,000.
- Income between PHP 400,001 and PHP 800,000: PHP 22,500 + 20% of the excess over PHP 400,000.
- Income between PHP 800,001 and PHP 2,000,000: PHP 102,500 + 25% of the excess over PHP 800,000.
- Income between PHP 2,000,001 and PHP 8,000,000: PHP 402,500 + 30% of the excess over PHP 2,000,000.
- Income over PHP 8,000,000: PHP 2,202,500 + 35% of the excess.
With this update, Filipino employees are expected to receive higher net take-home pay. The revised tax brackets will result in tax reductions for many workers, thereby increasing their disposable income. In addition, the simplified tax computation helps reduce the administrative workload for local employees.
Staying informed about the latest tax regulations in the Philippines is crucial. Failing to keep up with these changes may lead to penalties or even jeopardize the legal operations of a business. For a more detailed overview of company registration in the Philippines, feel free to refer to our dedicated guide.
Source: National Tax Research Center (NTRC)
