GENERATE

FUNDS

BORROW FROM LOCAL AND

INTERNATIONAL BANKS

SELL PUBLIC LANDS AND

GOVERNMENT

PROPERTIES

INVEST IN CORPORATIO

N

COLLECT TAX

POLITICAL INSTITUTIONS

TAX VS TAXATIONA FEE/

BURDENTO SUPPORT

THE “SERVICES” OF THE

GOVERNMENT

% FROM INCOME,

PROPERTIES, TRANSACTIONS

SYSTEM OF RAISING/

COLLECTING

POWER OF THE LEGISLATURE

REGULATES FLOW OF INCOME TO CHECK

INFLATION

I. GROSS INCOMEII. TAXABLE INCOMEIII.TAX DUE IV.WITHHOLDING TAXV. TAX PAYABLE VS TAX

REFUND

COMPUTATION: INCOME TAX RATES

Gross income (Monthly Income) x 12

I. GROSS INCOME (GI)

GROSS INCOME – ALLOWABLE EXEMPTIONS (P50,000 (STATUS) + NO. OF

DEPENDENTS (not to exceed 4) x P25,000

II. TAXABLE INCOME (TI)

Qualifications of qualified dependent:Must be parents, children, brothers or

sistersMust be minor, unmarried and unemployed

Must depend upon the taxpayer for chief support

For dependents over 21 years old, must be incapable of self-support due to mental or physical defect.

Refer to the tax rate tableAMOUNT UNDER THE RATE COLUMN + PERCENTAGE (TAXABLE INCOME – AMOUNT UNDER THE OVER COLUMN)

III. TAX DUE (TD)

TAX RATE TABLE (REFERENCE FOR TAXABLE INCOME)

OVER BUT NOT OVER

RATE

P 10,000 5%

P 10,000 P 30,000 P 500 + 10% of the excess over P 10,000

P 30,000 P 70,000 P 2,500 + 15% of the excess over P 30,000

P 70,000 P 140,000 P 8,500 + 20% of the excess over P70,000

P 140,000 P 250,000 P 22,500 + 25% of the excess over P140,000

P 250,000 P 500, 000 P 50,000 + 30% of the excess over P250,000

P 500, 000 P 125,000 + 32% of the excess over P500, 000

P 22, 500 + [ 25% (P 250, 000 – P 140, 000)]

= P22, 500 + [25% (P110, 600)]=P22, 500 + P27, 500

NOTE: 250, 000 = NET TAXABLE INCOME

Refer to the withholding tax tableStep 1: check the status

ME1 OR S1ME: MARRIED EMPLOYEES: SINGLE1: NUMBER OF QUALIFIED DEPENDENT

Step 2: Select whether the monthly income falls under the categories of employees with or without qualified dependents. Align the monthly income to the nearest possible amount not exceeding the subsequent constant numerical value on the right column.

Step 3: after aligning the amount, subtract the monthly income to the matched nearest amount on the table. The difference should not be negative.

Step 4: multiply the result that you got from step 3 to the indicated % on the status row

Step 5: add the result to the “exemption amount”

MULTIPLY THE ANSWER BY 12 MONTHS, WITHHOLDING TAX SHOULD CLOSELY MATCH THE TAX DUE

IV. WITHHOLDING TAX (WT)

WITHHOLDING TAX TABLE

MONTHLY 1 2 3 4 5 6 7 8

Exemption 0.00 0.00 41.67 208.33 708.33 1,875 4,166.67 10, 416.67

Status +0% over

+5% over

+10% over

+15% over

+20% over

+25% over

+30% over

+32% over

A. Table for Employees Without qualified Dependents.

1)Z 0.0 1 0 833 2,500 5,833 11,667 20, 833 41,667

2)S/ME 50.0 1 4,167 5,000 6,667 10,000 15,833 25,000 45,833

B. Table for Single/ married employee with qualified Dependents

1)ME1/S1 75.0 1 6,250 7,083 8,750 12,083 17,917 27,083 47,917

2)ME2/S2 100.0 1 8,333 9,167 10,833 14,167 20,000 29,167 50,000

3)ME3/S3 125.0 1 10, 417

11,250 12,917 16,250 22,083 31,250 52,083

4)ME4/S4 150.0 1 12,500

13,333 15,000 18,333 24,167 33,333 54,167

TAX DUE – WITHHOLDING TAX THAT WAS MULTIPLIED BY 12

TAX REFUNDNEGATIVE: RETURN OF EXCESS TAX

TAX PAYABLEMORE THAN 0: ADDITIONAL CREDIT TO THE GOVERNMENT

V. TAX PAYABLE VS TAX REFUND

MR. O, MARRIED, HAS A MONTHLY SALARY OF P32,000. HE HAS 7 CHILDREN. FOUR ARE ALREADY WORKING. TWO ARE STILL IN HIGH SCHOOL & ONE IN ELEMENTARY.

FIND THEIR: (A) GROSS INCOME, (B) NET TAXABLE INCOME, (C) TAX DUE, (D) WITHHOLDING TAX, (E) TAX PAYABLE OR TAX REFUND

EXAMPLE