Here's How You Can Compute Your Take-Home Pay Under the New TRAIN Law
Whether you're paid on a daily, weekly, semi-monthly or monthly basis.
Unlike self-employed professionals, business owners, and even some freelancers, salaried employees don’t receive the full amount of the compensation for their work. From the get-go, the Bureau of Internal Revenue already claims part of employees’ salaries through withholding taxes, which are set aside by employers even before the employee receives the rest of his or her pay.
With the advent of the Tax Reform for Acceleration and Inclusion (TRAIN) law, the good news is that the vast majority of employees will see a reduction in the withholding taxes that employers deduct from their pay beginning January 1.
Employees who are paid semi-monthly or twice a month will see the impact of lower withholding taxes when they receive their pay by around the middle of January. However, those who are paid daily should be feeling the impact of lower withholding taxes already. Employees paid on a weekly basis should see the effects by the end of the first week of January.
To help salaried employees figure out the likely impact of the new withholding tax rates on their take-home pay, we’ve prepared an infographic table that shows how much withholding taxes should be deducted for a sampling of compensation levels. There are separate computations for those paid on a daily, weekly, semi-monthly and monthly basis. For an idea of how much your withholding tax would be, just compare your compensation level with the nearest one among those in the sample.
For comparison, we also show how much taxes would have been deducted from your pay under the previous withholding tax table based on the old tax code. Due to space constraints, we can only show previous withholding taxes on two types of taxpayers: single and married with no qualified dependents and those with four qualified dependents, the maximum allowed by law. The withholding taxes for four other types of taxpayers (those with zero exemption and single/married taxpayers with one, two or three dependents) are not shown.
Those who want to
This story originally appeared on Entrepreneur.com.ph. Minor edits have been made