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Freelancer Tax Calculator PH: 8% vs Graduated (BIR)

Freelancers, professionals and online sellers: compare the 8% income tax option with graduated rates (40% OSD or itemized), including the 3% percentage tax, and see what is left to pay for the year.

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Good to know: For self-employed individuals and professionals who are NOT VAT-registered. Three ways to pay income tax: (1) 8% of gross receipts and other non-operating income above ₱250,000, in place of BOTH the graduated rates and the 3% percentage tax; (2) graduated rates on net income after the 40% optional standard deduction (OSD), plus 3% percentage tax; (3) graduated rates after itemized (actual) expenses, plus 3% percentage tax, which is itself deductible. The 8% option is only for gross up to ₱3,000,000 and must be chosen on the first-quarter return; it cannot be changed for the rest of the year. Mixed-income earners (with a salary) get no ₱250,000 reduction on the business part. Not covered: VAT-registered taxpayers, partnerships and corporations. Rules checked November 13, 2026; the BIR has the final word.

How to use it (step by step)

  1. 1Pick whether you are purely self-employed or also have a salary.
  2. 2Type your gross receipts for the year (or your best estimate), other business income and, if you keep receipts, your expenses.
  3. 3Read which option costs least, the difference, and what is still to pay after the tax your clients withheld (BIR Form 2307).

Words to know

8% income tax option
A simple rate for non-VAT self-employed people: 8% of gross receipts above ₱250,000, with no percentage tax and no need to list expenses. Choose it on the first-quarter return; it stays for the whole year.
Optional standard deduction (OSD)
Instead of listing real expenses, you deduct a flat 40% of gross receipts and are taxed on the other 60% at graduated rates.
Percentage tax
A 3% tax on gross receipts each quarter (BIR Form 2551Q) for non-VAT taxpayers who did NOT choose the 8% option.
Mixed-income earner
Someone with both a salary and business or professional income. The salary is always taxed at graduated rates.

How this is computed

Applies to: Non-VAT self-employed individuals and professionals in the Philippines (graduated rates from 2023, 8% option under the TRAIN law). Not for VAT-registered taxpayers or corporations.

Formula

  • 8% option: 8% × (gross receipts + other non-operating income − ₱250,000). No percentage tax. Mixed-income earners: no ₱250,000 reduction on the business part.
  • Graduated + OSD: income tax on 60% of gross receipts (after the 40% optional standard deduction), plus 3% percentage tax on gross receipts.
  • Graduated + itemized: income tax on gross receipts − actual expenses − the 3% percentage tax (a deductible business tax), plus the 3% percentage tax.
  • Graduated rates for the year: 0% up to ₱250,000; 15% of the excess over ₱250,000; ₱22,500 + 20% over ₱400,000; ₱102,500 + 25% over ₱800,000; ₱402,500 + 30% over ₱2,000,000; ₱2,202,500 + 35% over ₱8,000,000.
  • The 8% option is allowed only up to ₱3,000,000 gross and must be chosen on the first-quarter return.

Sample computation

Gross receipts of ₱1,200,000.00 and ₱200,000.00 of expenses (purely self-employed)

  1. 8% option: (₱1,200,000.00 − ₱250,000.00) × 8% = ₱76,000.00
  2. Graduated + OSD: tax on ₱720,000.00 = ₱86,500.00, plus 3% percentage tax ₱36,000.00 = ₱122,500.00
  3. Graduated + itemized: tax on ₱964,000.00 = ₱143,500.00, plus ₱36,000.00 = ₱179,500.00
  4. Lowest: the 8% option, ₱46,500.00 less than the next option

Official references

Rates last checked November 13, 2026. Results are estimates for planning: the BIR forms, current BIR issuances or your accountant have the final word.

Sources & methods

References checked November 13, 2026. Read each tool’s scope and assumptions before relying on its result.

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