Tax calculator for freelancers and self-employed

If your gross receipts are ₱3 million or less, you can choose to pay 8 % on receipts above ₱250,000. This replaces both the graduated income tax and the 3 % percentage tax, so it is often the cheapest and simplest option.

Otherwise you pay graduated rates from 0 % to 35 % on net income. Net income is your receipts minus either a flat 40 % optional standard deduction or your actual expenses. Non-VAT taxpayers also pay 3 % percentage tax on gross receipts.

If you also earn a salary, you are a mixed-income earner. The 8 % then applies to all your business receipts, with no ₱250,000 exemption, because the zero bracket is already used by your salary. Under graduated rates your business income is added on top of your salary.

Above ₱3 million you must register for VAT and the 8 % option is no longer available.

• You are a resident citizen, self-employed or a professional, and not VAT registered unless your receipts are above ₱3 million.
• Gross receipts are before any creditable withholding tax your clients deduct. That tax counts as an advance payment and does not change the total.
• The 8 % option must be chosen in your first quarterly return of the year. If you do not choose it, graduated rates apply.
• OSD is 40 % of gross receipts. Itemized expenses must be backed by receipts and books.
• Salary, if any, is your annual taxable compensation after SSS, PhilHealth, Pag-IBIG and the ₱90,000 tax-free 13th month and benefits.
• SSS, PhilHealth and Pag-IBIG contributions for self-employed members, VAT and local business taxes are not included.
• Rates and thresholds are the same in 2025 and 2026.

How much tax does a freelancer pay on ₱1.2 million?

Under the 8 % option, 8 % of ₱950,000, which is ₱76,000 for the year. With 40 % OSD you would pay ₱86,500 income tax plus ₱36,000 percentage tax.

When do I choose the 8 % option?

In your first quarterly income tax return (BIR Form 1701Q) or first percentage tax return of the year. The choice is fixed for the whole year.

Is the first ₱250,000 tax free?

Yes, for purely self-employed people under both options. Mixed-income earners already get it on their salary.

Do I still pay percentage tax under the 8 % option?

No. The 8 % is in place of both graduated income tax and the 3 % percentage tax.

• www.bir.gov.ph/income-tax
• www.officialgazette.gov.ph/2017/12/19/republic-act-no-10963
• bir-cdn.bir.gov.ph/local/pdf/RR%20No.%208-2018.pdf
• bir-cdn.bir.gov.ph/local/pdf/Digest%20RR%208-2018_copy.pdf