INCOME TAX RATES FOR

CITIZENS AND
RESIDENT ALIENS
TAX REGIMES
1. Graduated Tax Rates; or
2. 8% income tax on gross sales or gross
receipts and other non-operating income.
GRADUATED TAX RATES
1. Income Taxes; and
2. Percentage Tax (Sec. 116).
 GRADUATED TAX RATES
"Not over ₱250,000 0%
"Over ₱250,000 but not over ₱400,000 20% of the excess over ₱250,000

"Over ₱400,000 but not over ₱800,000 ₱30,000 + 25% of the excess over ₱400,000

"Over ₱800,000 but not over ₱2,000,000 ₱130,000 + 30% of the excess over ₱800,000

"Over ₱2,000,000 but not over ₱5,000,000 ₱490,000 + 32% of the excess over ₱2,000,000

"Over ₱8,000,000 ₱2,410,000 + 35% of the excess over

₱8,000,000
GRADUATED TAX RATES
"Not over ₱250,000 0%
"Over ₱250,000 but not over ₱400,000 15% of the excess over ₱250,000

"Over ₱400,000 but not over ₱800,000 ₱22,500 + 20% of the excess over
₱400,000
"Over ₱800,000 but not over ₱2,000,000 ₱102,500 + 25% of the excess over
₱800,000
"Over ₱2,000,000 but not over ₱8,000,000 ₱402,500 + 30% of the excess over
₱2,000,000
"Over ₱8,000,000 ₱2,202,500 + 35% of the excess over
₱8,000,000
GRADUATED TAX RATES
Bogart owns a restaurant business. In 2021, the business
had gross receipts of ₱2,000,000.00. Bogarts chose the
optional standard deduction as his mode of deduction.
How much would be the taxes that Bogart will pay for
2020?
GRADUATED TAX RATES
1. Percentage Tax:
Gross Receipts 2,000,000.00
Multiply: Tax Rate 1%
Percentage Taxes for 2021 20,000.00
GRADUATED TAX RATES
1. Income Tax:
Gross Receipts 2,000,000.00
Deduct: OSD 800,000.00
Taxable Income 1,200,000.00
Tax on 800,000 130,000.00
Add: Tax on 400,000 120,000.00
Total Income Tax Liability 250,000.00
GRADUATED TAX RATES

Percentage Taxes for 2021 20,000.00

Add: Income Taxes for 2021 250,000.00
Total Tax Liabilities for 2021 270,000.00
8%

Gross Receipts 2,000,000.00

Less: Statutory Deductions 250,000.00
Taxable Income 1,750,000.00
Multiply: Income Tax Rate 8%
Total Income Tax Liability for 2021 140,000.00
GRADUATED TAX RATES
Brenda is a lawyer engaged in private practice. She is also employed
with a school as a professor. For 2021, her gross receipts from
practice totaled 2,800,000.00. She uses the OSD as her method of
deduction. In the same year, her gross compensation income
amounted to 500,000.00. Her non-taxable compensation income
was 150,000.00. The school withheld 20,000.00 from her
compensation as income taxes. How much will be the total tax
liabilities of Brenda for 2021?
GRADUATED TAX RATES
1. Percentage Tax:
Gross Receipts 2,800,000.00
Multiply: Tax Rate 1%
Percentage Taxes for 2021 28,000.00
GRADUATED TAX RATES
1. Income Tax:

Gross Receipts 2,800,000.00

Deduct: OSD 1,120,000.00
Taxable Income from Business 1,200,000.00
Add: Taxable Compensation Income 350,000.00
Total Taxable Income 1,550,000.00
Tax on 800,000.00 130,000.00
Tax on 750,000.00 225,000.00
Total Income Tax Liability 355,000.00
Less: Taxes Withheld by Employer 20,000.00
Total Income Tax Payable 335,000.00
GRADUATED TAX RATES

Percentage Taxes for 2021 28,000.00

Add: Income Taxes for 2021 355,000.00
Total Tax Liabilities for 2021 383,000.00
8%
Tax on Compensation Income
Total Compensation Income 500,000.00
Less: Non-Taxable Compensation 150,000.00
Taxable Compensation Income 350,000.00
Tax on 250,000.00 0
Tax on 100,000.00 20,000.00
Total Tax on Compensation Income 20,000.00
8%
Taxable Income 2,800,000.00
Multiply: Income Tax Rate 8%
Income Tax Liability from Profession 224,000.00
Add: Tax on Compensation Income 20,000.00
Total Income Tax Liabilities 244,000.00
Less: Taxes Withheld by Employer 20,000.00
Total Tax Payable 224,000.00
NOT ALLOWED TO AVAIL OF THE 8% TAX
RATE
1. VAT taxpayers regardless of amount of gross sales or receipts;
2. OPT taxpayers (117 to 127);
3. Purely compensation income earners;
4. VAT-exempt and PT-exempt taxpayers;
5. Partners of GPP; and
6. Individuals enjoying income tax exemption.