TRAIN Package 1A- Personal Income Tax (PIT)

The Tax Reform for Acceleration and Inclusion (TRAIN, RA No. 10963) is the first package of the comprehensive tax reform program (CTRP), which seeks to to correct a number of deficiencies in the tax system to make it simpler, fairer, and more efficient. The Package 1 is divided into 1A and 1B because the Senate couldn't pass the whole package. Package 1B might be passed in 1Q of 2018 and Package 2 will also be filed to Congress by DOF soon.

It is signed into a law effective January 1, 2018.

[SCHEDULE]

Husbands and wives who are both working can benefit from a total of up to P500,000 in exemptions. 

The first P90,000 of the 13th month pay and other bonuses will be exempt from income tax. Other bonuses include productivity incentive, Christmas bonus.

Mandatory contributions such as SSS, HDMF and PhilHealth are excluded from taxable income, same as before.

Fringe benefits tax rate is increased to 35% of a final tax. (except rank and file employees)

De-Minimis benefits are also retained, excluded from taxable income.


Self-employed and professionals (SEPs) with gross sales below the VAT threshold now have the option to pay a simpler 8% flat tax in lieu of income and percentage tax, while those above the VAT threshold will follow the PIT schedule.

Annual Earnings	Tax
P250,000 and below	0%
P500,000 and below	exempt from 3% percentage tax
Below P3 million VAT threshold	can choose 8% flat tax on gross sales or PIT
Over P3 million	subject to PIT

In accordance with the new law, BIR released new tax table.