BIR confirms lower income tax rates for individual taxpayers effective on January 1, 2023

For those of you living and working here in the Philippines, be aware that starting January 1, 2023, lower tax rates will charged on individual taxpayers as confirmed by the Bureau of Internal Revenue (BIR), according to a recent GMA Network news report. Now is a good time to approach a certified expert on taxation if you want to see how this upcoming development will affect you.

To put things in perspective, posted below is the excerpt from the GMA Network news report. Some parts in boldface…

Individual taxpayers will be charged lower tax rates starting next year, the Bureau of Internal Revenue (BIR) said Friday.

Individuals earning purely compensation income, including non-business/non-profession related income and sole proprietors, “can look forward to a higher take-home pay in 2023,” according to the BIR.

The taxman said the lower income tax rate is pursuant to Republic Act 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Law, which took effect on January 1, 2018.

Starting January 1, 2023, those with annual taxable income below P250,000.00 are still exempt from paying personal income tax, while the rest of taxpayers, except those with taxable income of more than P8 million, will have lower tax rates ranging from 15% to 30% by 2023.

To maintain progressivity, the BIR imposed a 35% tax rate on top individual taxpayers with annual taxable incomes exceeding P8 million, up from 32% previously.

The income tax on the individual’s taxable income shall be computed based on the following schedules, effective January 1, 2023, and onwards:

The taxation reference from GMA’s news report.

Compared to the income tax rates imposed during the initial implementation of the TRAIN Law in 2018, the new annual income tax rates for individuals significantly decreased by 5% for those with taxable income of more than P250,000.00 up to P2,000,000.00, while a 2% decrease in tax rate was noted for those with taxable income of more than P2,000,000.00 up to P8,000,000.00.

The above article ended stating that employers must use the revised withholding tax table to calculate the withholding taxes on their employees’ compensation income taking effect on January 1, 2023.

Let me end this piece by asking you readers: What is your reaction to this new development? When was the last time you consulted with a tax expert for insight about your income tax returns? Do you think this new development will boost the national economy as a whole somehow in 2023?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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