Philippines self-employed net income calculator (8% option)
Under the Philippine 8% option you pay eight percent of gross receipts above the first 250,000 pesos, and that single charge replaces both the graduated income tax and the 3% percentage tax.
Worked example: with Annual gross receipts of 1,200,000, this model computes Net income / year 1,124,000. See the full breakdown.
⚠ Illustrative rates Updated for 2026 · sources checked 2026-08-22
How 8% option in Philippines is calculated
The 8% option is unusual in replacing two taxes at once. Elect it and the graduated income tax and the 3% percentage tax both disappear, leaving a single rate on gross receipts with the first 250,000 pesos free. There is nothing to deduct and almost nothing to compute, which is precisely the appeal for a freelancer with few costs.
The choice is real and it is annual. The alternative — graduated rates with either itemised deductions or the 40% optional standard deduction — wins whenever your costs are substantial, and the crossover point is easy to find with the same receipts figure. The option must be elected in the first quarterly return of the year, and it disappears entirely above the 3,000,000 peso VAT threshold.
Worked example
| Annual gross receipts (PHP) | 1200000 |
|---|---|
| Receipts above 250,000 ✓ | 950000 |
| Income tax (8%) ✓ | 76000 |
| Net income / year ✓ | 1124000 |
Every row is computed by the engine from the inputs above. Rows marked ✓ are additionally pinned by a published self-test vector.
Frequently asked questions
How is the 8% tax calculated?
Eight percent of gross receipts above 250,000 pesos. On 1,200,000 pesos of receipts that is 8% of 950,000, or 76,000 pesos — and no percentage tax on top.
Who cannot use the 8% option?
Anyone above the 3,000,000 peso VAT threshold, and VAT-registered taxpayers. A mixed-income earner who also draws a salary can elect it but loses the 250,000 peso relief, which is applied against compensation income instead.
Is 8% always better than the graduated rates?
No. It taxes gross receipts with no deductions, so it wins for low-cost service work and loses where real expenses are large. The graduated alternative allows itemised deductions or a flat 40% optional standard deduction.
Sources
- Bureau of Internal Revenue — income tax for self-employed individuals and professionals · checked 2026-08-22
- The 8% tax for freelancers and the self-employed (2026 rules) · checked 2026-08-22
Estimate. Not tax advice. The rates in this calculator are illustrative: they reproduce the shape of the charge through 3 self-test cases, but they are not the official schedule, so the amount shown will not match your bill. Use the official source above for that.
Check the arithmetic yourself: how this calculator is verified — the formula behind every derived value, the 3 test cases the engine reproduces, and what the badge does and does not claim. Also available as machine-readable JSON.
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