Bigger take-home pay under Train

THE Tax Reform for Acceleration and Inclusion Act (Train) effectively increases the takehome pay not only of salaried workers earning P250,000 yearly and below but also of those with annual taxable income from P250,000 to a maximum of P2 million.

These represent some 943,967 or 13.48 percent of salaried workers, based on the Bureau of Internal Revenue (BIR) database. On a monthly basis, this is equivalent to a taxable income of around P21,000 to P170,000.

Finance Secretary Carlos Dominguez III said individuals earning above P250,000 a year but less than P2 million used to shell out about 30 percent to 32 percent of their net taxable income for their personal income tax (PIT) payments. But under the first five years of the Train’s implementation, they would only pay between 20 and 30 percent for the PIT, he said.

The Train also provides tax relief to over six million or 86 percent of compensation earners with taxable income of P685 per day or P20,833 per month and below as they will be exempted from paying the PIT. The 13th month pay and other bonuses not exceeding a total of P90,000 are also tax-free under the Train.

Based on BIR database, around 2,038,202 or 29.11 percent of salaried workers are minimum wage earners who are already exempted from the PIT even before Train, while 3,987,509 or 56.96 percent are new beneficiaries of the Train’s zero-tax provision.