Sec 3- INDIVIDUAL CITIZEN AND INDIVIDUAL RESIDENT ALIEN OF THE

PHILIPPINES

One of the highlights of the Tax Reform for Acceleration and Inclusion (TRAIN) Law is the
lessening of the tax imposed on the income of the minimum wage earners taxpayers. Before, under
the National Internal Revenue Code (NIRC), an individual taxpayer is taxed at the rate of 5-32%.
Under the train Law, effective January 1, 2018 until December 31, 2022, taxpayers with the gross
income of ₱250,000.00 will be exempted from paying tax, while those who are not will be taxed at
the rate of 20-35%. And effective from January 1, 2023, taxpayers with the gross income of
₱250,000.00 will still be exempted from paying tax and the remaining taxpayers, depending on their
income bracket, will be subject to 15-35% income tax rate.

Below is the effective income tax table under the TRAIN law:

Effective January 1, 2018 until December 31, 2022:

RANGE OF TAXABLE
TAX DUE= a+(b*c)
INCOME
BASIC ADDITIONAL OF EXCESS
OVER NOT OVER AMOUNT RATE OVER
(a) (b) (c)
- 250,000 - -
250,000 400,000 - 20% 250,000
400,000 800,000 30,000 25% 400,000
800,000 2,000,000 130,000 30% 800,000
2,000,000 8,000,000 490,000 32% 2,000,000
8,000,000 - 2,410,000 35% 8,000,000

Effective January 1, 2023 and onwards:

RANGE OF TAXABLE
TAX DUE= a+(b*c)
INCOME
 BASIC ADDITIONAL OF EXCESS
OVER NOT OVER AMOUNT RATE OVER
(a) (b) (c)
- 250,000 - -
250,000 400,000 - 15% 250,000
400,000 800,000 22,500 20% 400,000
800,000 2,000,000 102,500 25% 800,000
2,000,000 8,000,000 402,500 30% 2,000,000
8,000,000 - 2,202,500 35% 8,000,000

As shown on the tables above, the higher burden is imposed on the taxpayers who are
earning well and favouring the individuals with low income since one of President Duterte’s motives
is to help the poor, minimum or low income Filipinos by exempting them from paying income
taxes.

Below is the graduated income tax table under the NIRC:

RANGE OF TAXABLE
TAX DUE= a+(b*c)
INCOME
BASIC ADDITIONAL OF EXCESS
OVER NOT OVER AMOUNT RATE OVER
(a) (b) (c)
- 10,000 - 5% -
10,000 30,000 500 10% 10,000
30,000 70,000 2,500 15% 30,000
70,000 140,000 8,500 20% 70,000
140,000 250,000 22,500 25% 140,000
250,000 500,000 50,000 30% 250,000
500,000 - 125,000 32% 500,000
 Comparing the NIRC and TRAIN Law, these are my observations of the major changes on
the income tax provision:

 Before (NIRC), the schedule used for computing the tax due of Purely Compensation
income earners, Purely Self-Employed individuals and mixed income earners is the same.
Now, (TRAIN Law) reformation of the income tax schedule was made. There’s a different
income tax schedule for Purely Compensation income earners which is the Graduated
income tax schedule shown above and another schedule for the purely self-employed and
professionals whose gross receipts or gross sales do not exceed P3,000,000.00 wherein the
taxpayer shall have the option to avail if he/she will opt to use the graduated rates under
Section 24(A)(2)(a) of the Tax Code, as amended, or 8% of his/her gross sales or gross
receipts in excess of P250,000.00.
 Comparing the Graduated income tax Table of NIRC and Train Law, the number of income
brackets was reduced from seven to six. Since this is one of the benefits of the Train Law, to
make Tax Law simpler, it is wise to reduce the number of brackets in order to somehow
make the tax schedule easier to use.
 From P10,000.00, the Train Law exempts the individuals earning lower than P250,000.00.
Obviously, this is in favour of the individuals in this range of income but at the expense of
the individuals earning P250,000.00 and above. This can be treated as fair and just because
the fact that individuals earning more than P250,000.00 based on their income is fair
enough to sustain their living and much capable of paying taxes as compared to the
individuals earning lower than P250,000 income. This way, the lowest income earner could
enjoy their whole income and therefore could result to more active economy and larger
collection for the government to sustain the administration’s “Build, Build, Build” campaign
and other projects.
 More simplified system is also implemented in the new tax code. The basic personal and
additional exemption and premiums paid on hospitalization, to simplify the process of
computing the tax due, was assimilated into P250,000.00 regardless of the civil status or
number of dependent(s) of the taxpayer. Due to the problem regarding the over population
of the country, one way to aide this problem is granting an equal deduction on the gross
income of single and individuals with qualified dependents so that there will be no more
 motivation for the taxpaying individual to have more children/dependent just to minimize
his/her taxable income.
 It is also observable that the new tax schedule changed the highest amount of taxable
income from P500,000.00 (NIRC) to P8,000,000.00. setting a new maximum taxable income
promotes fairness in computing the tax due of the high earning individuals because for us, it
would be unfair for the P500,000 taxable income earner to be taxed at the same rate as of
those earning P8,000,000.

On the other hand, the following are the provisions that didn’t change in the implementation of
the Train Law:

 The contributions on Social Security System (SSS), Government Service Insurance System
(GSIS), Pag-Ibig, PhilHealth and other mandatory contributions are still non-taxable. For
me, there is no reason for these contributions to be taxable because these are supported and
tolerated by the government, so making such contributions tax exempt encourages the
individuals to pay such dues.
 Also, de minimis benefits are still exempted from tax. For the enjoyment of the employees
of their de minimis benefits and also to encourage them to be more productive in their jobs,
which is favourable for the government and the economy, exempting such benefits from tax
is a fair thing to do by the government.