TAXATION
CHEAT SHEET
Gross Income can be: Taxable Income/Gross Compensation Income:
1. Salaries Gross Income – Total Contribution
2. Wages
3. Other forms of Compensation TC (non-taxable) includes:
a. Fixed or Variable Allowance (e.g. rep and
transpo allowance (RATA), cost of living - SSS/GSIS
(COLA) - PhilHealth
- Home Development Mutual Fund (HDMF)
FOR GOV. EMPLOYEES: - Union Dues
Note: RATA and PERA (personal economic relief allowance) - Compensation for Injuries and Sickness
are EXEMPT from taxation
ACA (additional compensation allowance) in “Other Taxation of 13th Month Pay
Benefits” is TAXABLE but subject to a limit
Not taxable up to P90,000, excess is taxable
FOR NON-GOV. EMPLOYEES: Taxation of Bonus
Allowances are subject to tax, except when: i. Performance Based
- allowance is a reimbursement for necessary
expenses incurred in the pursuit of trade Received under Collective Bargaining
- allowance is subject to liquidation Agreement (CBA) and productivity incentive,
- allowance also benefits the employer non-taxable until P10,000
b. 13th Month Pay – for rank and file employees ii. Non-performance Based (Other
and is equal to a 1 month salary. Benefits)
c. Christmas Bonus – additional compensation at
the discretion of owner. Combined with 13th month and subjected to
limit of P90,000, and excess is taxable
d. De Minimis Benefits – are NOT TAXABLE provided until the limit. Excess are transferred to “13th month
pay and other benefits” and is subject to P90,000 limit. any EXCESS is taxable.
i. Monetized unused vacation leave credits for private employees not exceeding 10 days
ii. Monetized vacation and sick leave credits paid to gov officials
iii. Medical cash allowance not exceeding P750 per sem OR P125 per month
iv. Rice subsidy of P1,500 OR 1 sack of 50kg per month
v. Uniform and clothing allowance not exceeding P5,000 per annum
vi. Yearly medical benefits not exceeding P10,000 per annum
vii. Laundry allowance not exceeding P300 per month
viii. Employees achievement award not exceeding P10,000
ix. Gifts given during Christmas or anniversary celeb not exceeding P5,000 per anuum
x. Daily meal allowance for overtime work not exceeding 25% of minimum wage
xi. Benefits received from CBA and productivity incentive schemes, provided that if combined, both do
not exceed P10,000 per employee, per taxable year.
e. Overtime Pay – (a) meals for OT is non-taxable unless exceeds 25% of minimum wage, (b) reimbursement of
transpo cost by employee is not taxable
f. Hazard Pay – compensation for employees doing dangerous work
g. Commission – percentage of sales made h. Fees
i. Honoraria j. Vacation or sick leaves – taxable
k. Retirement pay l. Separation Pay
m. Compensation paid in kind
Tax Due: Refer to Tax Table
IF Taxable Income is: Then Tax Due is:
Not over P250,000 0%
Over P250,000 but not over P400,000 20% of the excess over P250,000
Over P400,000 but not over P800,000 P30,000 + 25% of excess over P400,000
Over P800,000 but not over P2,000,000 P130,000 + 30% of excess over P800,000
Over P2,000,000 but not over P8,000,000 P490,000 + 32% excess over P2,000,000
Over P8,000,000 P2,410,000 + 35% of excess over
P8,000,000
