Filipinos To Expect Income Tax Breaks In 2023

Individual taxpayers will get income tax reductions next year to provide Filipino consumers additional purchasing power. However, this would result in a drop in billions of government revenues.

This is due to the second tranche reduction in personal income tax as mandated under the Tax Reform for Acceleration and Inclusion (TRAIN) law to take effect on January 1, 2023.

Salaried employees and self-employed individuals earning a taxable income of ₱250,000 per year, or around ₱21,000 a month, are still exempted from paying the personal income tax (PIT).

Other taxpayers in higher income brackets, except those earning more than ₱8 million, will enjoy lower tax rates ranging from 15% to 30% by 2023.

Tax rates will be decreased by 5% for those with taxable income of more than ₱250,000 up to ₱2 million, while a 2% reduction in tax rate will be applied for individuals earning more than ₱2 million up to ₱8 million.

“The TRAIN law adjusted personal income taxes and fixed the inequity of our tax system,” Finance Secretary Benjamin E. Diokno said in a statement.

“We want our taxpayers to reap the fruits of their labor while enabling them to contribute their fair share to national development,” he added.

To sustain an efficient tax system, the ultra-rich or those earning ₱8 million a year and above remains taxed at 35%.

However, the tax reductions come at a cost and will lower government tax collections by around ₱97.7 billion per year.

“With the said reduction in the annual Income Tax rates, Individuals Earning Purely Compensation Income will have lower withholding tax deductions from their monthly salary, thereby increasing their take-home pay.” Bureau of Internal Revenue Commissioner Romeo D. Lumagui, Jr. said.

Source: Manila Bulletin