Graduated Income Tax Calculator (Philippines): The 2026 TRAIN Table, Explained
If your expenses are high, the graduated income tax option can be cheaper than the 8% flat rate. Here's exactly how the TRAIN tax table works, with a worked example and a free calculator that compares both.
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Enter your sales and expenses; see your graduated tax and the 8% option side-by-side.
Open the free calculator →The 2026 graduated income tax table
Graduated rates tax your net taxable income — your profit after deductions — in rising bands. The first ₱250,000 every year is tax-free:
| Annual taxable income | Income tax |
|---|---|
| ₱0 – 250,000 | 0% |
| Over 250,000 – 400,000 | 15% of excess over 250,000 |
| Over 400,000 – 800,000 | ₱22,500 + 20% of excess over 400,000 |
| Over 800,000 – 2,000,000 | ₱102,500 + 25% of excess over 800,000 |
| Over 2,000,000 – 8,000,000 | ₱402,500 + 30% of excess over 2,000,000 |
| Over 8,000,000 | ₱2,202,500 + 35% of excess over 8,000,000 |
Worked example
Say you're an online seller with ₱900,000 in gross sales and ₱500,000 of documented business expenses (goods, shipping, ads):
| ₱900,000 gross · graduated (itemized) | Amount |
|---|---|
| Gross sales | ₱900,000 |
| Less: business expenses | −₱500,000 |
| Net taxable income | ₱400,000 |
| Income tax: 15% × (400,000 − 250,000) | ₱22,500 |
| Plus: 3% percentage tax × 900,000 | ₱27,000 |
| Total tax for the year | ₱49,500 |
For comparison, the 8% option on the same gross would be (900,000 − 250,000) × 8% = ₱52,000. Here graduated is slightly cheaper because expenses are high. Flip the numbers — low expenses — and 8% usually wins.
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Compute my tax →Itemized expenses vs the 40% OSD
Under graduated rates you choose how to deduct:
- Itemized: deduct your actual, receipted business expenses. Best when real expenses are high and well-documented.
- 40% Optional Standard Deduction (OSD): deduct a flat 40% of gross — no receipts needed — and pay tax on the remaining 60%. Best when your real expenses are below 40% of sales, or your records are thin.
Frequently asked questions
＋ How is graduated income tax computed in the Philippines?
Graduated income tax is charged on your net taxable income (gross sales minus allowed deductions, or the 40% Optional Standard Deduction). You apply the TRAIN tax table: the first ₱250,000 is tax-free, then rising rates of 15%, 20%, 25%, 30%, and 35% apply to each higher band of income.
＋ What is the graduated income tax table for 2026?
Under TRAIN: ₱0–250,000 is 0%; over 250,000–400,000 is 15% of the excess over 250,000; over 400,000–800,000 is ₱22,500 + 20% of the excess; over 800,000–2,000,000 is ₱102,500 + 25%; over 2,000,000–8,000,000 is ₱402,500 + 30%; and over 8,000,000 is ₱2,202,500 + 35%.
＋ Do I pay percentage tax on top of graduated income tax?
Yes. If you are non-VAT and use graduated rates, you also pay the 3% percentage tax on gross sales/receipts, filed quarterly via BIR Form 2551Q. The 8% flat-rate option skips this because it already bundles the percentage tax.
＋ What is the 40% Optional Standard Deduction (OSD)?
Instead of itemizing actual expenses, you can deduct a flat 40% of your gross sales/receipts and be taxed on the remaining 60%. It needs no receipts and often lowers your graduated tax when your real expenses are under 40% of sales.
＋ Is graduated or the 8% flat rate cheaper?
It depends on your margins. The 8% flat rate usually wins for low-expense businesses because it is a small rate on gross. Graduated rates can win when expenses are a large share of sales, because you are taxed on profit. Compute both to be sure.
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Try Resibo free →Disclaimer: This calculator and guide are general information for purely self-employed individuals (non-VAT, gross ≤ ₱3,000,000) and are not official tax advice. Rules, rates, and deadlines can change and your situation may differ. Confirm specifics with a licensed CPA or your BIR RDO. Current as of 2026.