Guide on How to Compute
Withholding Tax
NOTE: BIR Tax Table is needed in computing your withholding tax. Check BIR Tax table here.
Step 1
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Determine the following:
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Step 2
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Determine your Taxable Income
Taxable income is the portion of income that is the subject of taxation. Taxable Income can be calculated using the formula:
Taxable Income = Gross Taxable Earnings - Non Taxable Deductions Please refer to my recent posts on how to compute SSS, PhilHealth and Pag-IBIG Contributions.
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Step 3
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Using the tax table, determine tax table schedule to be used.
Employers normally uses "Semi-Monthly" and "Monthly".
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Step 4
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Determine Tax Status
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Step 5
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Determine Compensation Level based from Taxable Income. To do this, from his Tax Status of "ME1", head over to the compensation row and look for the highest amount that DOES NOT EXCEED his taxable income.
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Step 6
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Calculate Withholding Tax using the general formula:
Withholding Tax = [(Taxable Income - Fix Compensation Level) x % Over] + Base Tax
Employee A, married and having one qualified dependent, with monthly basic salary of PHP 12,000 and with monthly payroll period, has a withholding tax of PHP 592.93.
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More Examples
Example 2
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Employee with Withholding Tax Computed Monthly
Monthly Basic Salary: P15,000.00 Status: Married with 2 qualified dependents Overtime Pay: P5,500.00 Taxable Allowance: P3,000.00 Tardiness: P150.00 Gross Taxable Earnings = Basic Monthly Salary + Overtime Pay + Holiday Pay + Night Differential + Taxable Allowances
Contributions (based from Gross Earnings of PHP 23,500.00):
Non Taxable Deductions = Tardiness Deduction + Absences + SSS Contribution + Philhealth Contribution + HDMF Contribution
Taxable Income = Gross Taxable Earnings - Non Taxable Deductions
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Free Online Tax Contribution Calculator
Try this interactive calculator to compute for your Withholding Tax.
Procedure:
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DISCLAIMER: This calculator follows the latest BIR Tax table and is based on the author's own interpretation. Should you find any disparity or inaccuracy, please let the author know by throwing it in using the comment or contact section.
All data entered on this calculator are not saved.
All data entered on this calculator are not saved.
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