The Department of Finance (DOF) finally released a Tax Calculator to simplify how our income taxes will be affected once the proposed Tax Reforms of 2017 are approved.
Now, we can have our idea whether we would really benefit from the DOF’s Tax Reform Acceleration and Inclusion or TRAIN program.
If you want an easy step-by-step guide on how to use the DOF’s Tax Calculator, continue reading.
(To know what’s included in the DOF’s proposed tax reforms, click here: What’s in the Philippines’ Tax Reform Bill?)
Step-by-step guide: How to use the Tax Calculator
1. Visit the official Department of Finance website showing the Tax Calculator here. Click the “Start” button at the bottom of the page to begin the Tax Calculator.
2. Answer “Question #1: What is your Marital Status?” Choose the appropriate response, that is, if you’re “Single” or “Married”.
3. Next, identify if you and your spouse, if you’re married, are working in the private sector or in government.
4. Next, type your and your spouse’s “Gross Monthly Salary”.
Take note, this should be Gross — meaning the full salary you should be receiving if there are no deductions yet, such as deductions for SSS or GSIS contributions, PAG-IBIG, Philhealth, or SSS/GSIS loans, etc. This should also be Monthly salary, not weekly or annual salary.
Input your Gross Monthly Salary and your spouse’s Gross Monthly Salary (if you’re married) in the appropriate boxes.
5. Finally, type in the number of Dependents you have. “Dependents” may be your kids or other persons living in your residence dependent on your financial support who are aged 21 years old or below.
Take note that only a maximum of four (4) dependents will be allowed for additional exemptions. Also, the spouse with the higher income is assumed to claim deductions for dependents.
6. Click the “Calculate” button to find out how much income tax you’re going to pay with the proposed Tax Reform program.
That’s it!
Now you have an idea how your income tax will change with the proposed tax reforms. Thanks to the Department of Finance for this initiative!
Still we believe that although a majority of Filipinos would benefit from the reduced income taxes, we are concerned that the impact of the other proposed tax reforms — such as higher taxes on oil, petroleum products, automobiles, sugary and salty products, etc. — won’t simply negate the income tax reduction.
Otherwise, given the consequential increase in prices of products and commodities, we might not feel the benefit given the lower purchasing power of our remaining hard-earned cash.
Highlights of Philippines’ Tax Reform Package of 2017
The four key components of the Duterte administration’s tax reform program are:
- 1. Lowering of personal income taxes, except for high income earners
- 2. Higher taxes on diesel, petroleum, and other oil products
- 3. Removing VAT Exemptions
- 4. New Excise Taxes on Cars and Automobiles
For more information about these tax reform proposals, check out this article: Details of the DOF’s Tax Reform Package of 2017