Question & AnswerQ&A (Republic Act No. 9504)
A 'statutory minimum wage earner' refers to a worker in the private sector paid the statutory minimum wage, or an employee in the public sector with compensation income of not more than the statutory minimum wage in the non-agricultural sector where he/she is assigned.
The income tax rates for individuals are graduated as follows: Not over P10,000 - 5%; Over P10,000 but not over P30,000 - P500 + 10% of excess over P10,000; Over P30,000 but not over P70,000 - P2,500 + 15% of excess over P30,000; Over P70,000 but not over P140,000 - P8,500 + 20% of excess over P70,000; Over P140,000 but not over P250,000 - P22,500 + 25% of excess over P140,000; Over P250,000 but not over P500,000 - P50,000 + 30% of excess over P250,000; Over P500,000 - P125,000 + 32% of excess over P500,000.
No, minimum wage earners as defined in Section 22(HH) are exempt from the payment of income tax on their taxable income. Their holiday pay, overtime pay, night shift differential pay, and hazard pay are also exempt.
The Optional Standard Deduction allows an individual taxpayer, other than a nonresident alien, to elect a standard deduction not exceeding 40% of his gross sales or gross receipts in lieu of other allowable deductions. This election is irrevocable for the taxable year and exempts the taxpayer from submitting detailed financial statements.
The basic personal exemption amounts to Fifty Thousand Pesos (P50,000) for each individual taxpayer.
An additional exemption of Twenty-Five Thousand Pesos (P25,000) is allowed for each dependent, not exceeding four dependents. In the case of married individuals, only one spouse may claim this exemption. In legally separated spouses, only the spouse with custody of the child can claim it, but total exemptions claimed by both should not exceed the maximum allowed.
Exempt from filing are individuals earning pure compensation income where tax has been correctly withheld, minimum wage earners as defined in Section 22(HH), and individuals exempt from income tax pursuant to the Code and other laws. However, individuals earning compensation from two or more employers must file a return.
Every employer must withhold tax on wages paid to employees except for minimum wage earners as defined in Section 22(HH). The withholding tax shall be determined as per the rules and regulations prescribed by the Secretary of Finance and the Commissioner.
Husband and wife shall compute their income tax separately on their respective total taxable incomes. If income cannot be exclusively attributed to either spouse, it shall be divided equally between them for tax purposes.
If any provision is declared invalid or unconstitutional, the other provisions not affected shall continue to be in full force and effect as per the Separability Clause.