The Bureau of Internal Revenue said Friday individuals earning purely compensation income, including non-business and non-profession related income, can look forward to a higher take-home pay in 2023.
It said that under Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Law, those with annual taxable income below P250,000are would remain exempt from paying personal income tax, while the rest of taxpayers, except those with taxable income of more than P8 million, would have lower tax rates ranging from 15 percent to 30 percent starting January 1, 2023.
Meanwhile, the top individual taxpayers whose annual taxable income exceeds P 8 million would pay a higher tax rate of 35 percent in 2023, up from the previous 32 percent.
The BIR said compared to the tax rates imposed during the initial implementation of the TRAIN Law in 2018, the new rates for individuals decreased by 5 percent for those with taxable income of more than P250,000 up to P2 million. A 2-percent decrease in tax rate was also noted for individuals with taxable income of more than P million to P8 million.
“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,” said BIR Commissioner Romeo Lumagui Jr.