Check Your Taxes For January! New Tax Reform Should Now Be In Place
Last December, President Rodrigo Duterte signed into law the Tax Reform for Acceleration and Inclusion (TRAIN) measure of the administration’s planned tax reform initiative. The new measure came with a variety of tax implementation changes such as the lowering of income tax, a new excise tax on diesel and gasoline, and more.
While the TRAIN measure was met with varied opinions, there really is no stopping the law from getting implemented. Those who will benefit from the lowered income tax are most fortunate because the new tax calculations should already be applicable as early as this month.
According to the Bureau of Internal Revenue (BIR), employers should now be implementing the new income tax system, which exempts the first P250,000 in annual income from being taxed. Those earning in the P250,000 to P400,000 bracket will be paying a 20% tax of their income after the P250,000. Those earning over P400,000 but not over P800,000 will be paying P30,000 in tax plus whatever is 25% of their income in excess of P400,000.
People earning above P800,000 will be facing bigger taxes. Those earning between P800,000 and P2 million will be billed P130,000 plus an additional 30% of the excess over P800,000. Those earning over P2 million but not exceeding P8 million will have to pay P490,000 plus 32% of what’s after the P2 million. Earners over the P8 million mark will pay a staggering P2.41 million plus 35% of the excess over P8 million.
Since a huge chunk of Filipinos are earning below P250,000 a month, BIR is expecting more people to start getting tax exemptions as early as January.
While some people have already seen bigger paychecks this week, some are still awaiting the effects of the new tax reform. A short interview we conducted with a government employee revealed that his paycheck has yet to reflect the lowered income tax. Another conversation with an IT employee of a media company revealed that their taxes for January has yet to decrease, as well. One of the respondents have been informed, however, that the unaccounted-for tax reductions will be paid retroactively in February.
In an interview with ABS-CBN News, BIR spokesperson Marissa Cabreros said, “Kung sakali man na hindi nai-adjust, dapat po is simulan na nilang i-recompute ’yan kasi para naman po maibalik sa empleyado kung may sobra pong naikaltas sa mga paunang suweldo. (Employers who have yet to reduce their employees’ taxes should start recomputing and give back the difference in their next paycheck.)”
This is why if you’re earning above minimum wage, you should definitely check your pay slip this coming Monday to check whether your taxes have really been adjusted. If not, remember that you are entitled to ask for a recomputation and a refund.