TRAIN Law Income Tax Brackets for 2026, With a Worked Example

Income tax here is not one rate applied to your whole salary. It climbs in steps, and the TRAIN law set the steps that are still in use in 2026. Once you can see where your income lands, the figure on your payslip stops being a mystery.

The brackets that apply now

This table took effect in January 2023 and still applies in 2026. Each band taxes only the income that falls inside it, not your whole income. The peso figure in each row is a running total that already covers everything in the rows above it.

• Up to ₱250,000: no tax.
• ₱250,000 to ₱400,000: 15% of the amount over ₱250,000.
• ₱400,000 to ₱800,000: ₱22,500 plus 20% of the amount over ₱400,000.
• ₱800,000 to ₱2,000,000: ₱102,500 plus 25% of the amount over ₱800,000.
• ₱2,000,000 to ₱8,000,000: ₱402,500 plus 30% of the amount over ₱2,000,000.
• Over ₱8,000,000: ₱2,202,500 plus 35% of the amount over ₱8,000,000.

Why the first ₱250,000 is free

The first ₱250,000 of taxable income each year is taxed at zero. Spread across twelve months, that is about ₱20,833 a month. It is the reason many minimum and near-minimum earners owe no income tax at all once their mandatory contributions are taken out.

What counts as taxable income

Tax is not applied to your gross salary. Your SSS, PhilHealth, and Pag-IBIG contributions come out first, and your 13th month pay and similar benefits are set aside up to ₱90,000 a year. What remains is your taxable income, and only that meets the table above.

A worked example

Say your taxable income for the year is ₱500,000. The first ₱250,000 is free. The next ₱150,000, up to ₱400,000, is taxed at 15%, which is ₱22,500. The remaining ₱100,000, from ₱400,000 to ₱500,000, is taxed at 20%, which is ₱20,000. Your tax for the year is ₱42,500. That is the shortcut the table captures: the ₱22,500 already covers everything up to ₱400,000, so you only add 20% of the ₱100,000 above it.

The withholding version

Employers do not wait until year-end. They use a monthly withholding table, built from these same brackets, to take a portion of the tax each payday. Small gaps between what was withheld and what you actually owe are squared up in a year-end adjustment. That adjustment is often where a tax refund on your last payslip of the year comes from.

To see your own figure worked out, use the income tax calculator.