Can You Pay Your BIR Income Tax Due in Two Installments? NIRC Section 56(A)(2) Explained

An individual taxpayer whose annual income tax due exceeds ₱2,000 may pay it in two equal installments instead of one lump sum, under Section 56(A)(2) of the National Internal Revenue Code (NIRC): the first installment at the time the return is filed, and the second on or before October 15 following the close of the calendar year. This is a statutory cash-flow option, not a penalty-avoidance workaround — it only defers half the payment, and it doesn’t apply once the tax due is ₱2,000 or less.

This guide covers who can use it, the two deadlines, and what happens if the second installment is missed. For the return this applies to, see How to File BIR Form 1701A: Annual Income Tax Return for Self-Employed Individuals and Professionals; for a comparable installment mechanic on a different tax type, see Can You Pay BIR Estate Tax in Installments? The 2-Year Rule Under Section 91(C).

Who can use the two-installment option? #

The option is available to individual taxpayers — not corporations — whose income tax liability shown on the annual return exceeds ₱2,000. A self-employed individual, professional, or mixed income earner filing BIR Form 1701 or 1701A with a tax due above that threshold can split the payment; a taxpayer with ₱2,000 or less in tax due pays it in full with the return, since the statute’s installment mechanic simply doesn’t engage below that figure.

A concise restatement of the underlying rule, drawn from tax-practice summaries of NIRC Section 56(A)(2), puts it this way:

“When a tax due is in excess of Two thousand pesos (P2,000), the tax [may be paid] in two (2) equal installments, in which case, the first installment shall be paid at the time the return is filed and the second installment on or before October 15 following the close of the calendar year.”

This site relied on secondary tax-practice commentary summarizing Section 56(A)(2) for this passage, as it could not reach a primary Bureau of Internal Revenue or Official Gazette copy of the codified provision directly to re-verify the exact statutory phrasing — confirm the precise text of Section 56(A)(2) as amended before relying on it for a formal filing position.

What are the two deadlines? #

The two dates are fixed by the statute itself — they don’t move based on when a taxpayer happens to file within the filing season, as long as the return is filed on or before its own due date. A taxpayer filing early does not get to push the second installment earlier or later; October 15 stays October 15.

What happens if the second installment is missed? #

A missed October 15 installment becomes a deficiency on the unpaid balance, carrying surcharge and interest like any other underpaid tax — electing the installment option is not a way to convert half the liability into a permanently open-ended balance. Once the second installment is late, the taxpayer should treat it the same way as any other overdue BIR payment: compute and pay the balance plus applicable surcharge and interest as soon as possible, rather than waiting for a specific BIR notice.

Worked example: a self-employed professional splits a ₱90,000 tax due #

A self-employed professional with ₱90,000 in annual income tax due on BIR Form 1701A pays ₱45,000 at filing and the remaining ₱45,000 by October 15.

If the professional instead pays the full ₱90,000 at filing, no installment mechanic is needed — the option exists specifically for taxpayers who want to manage cash flow across the two dates rather than pay the full amount up front. Missing the October 15 payment would expose the remaining ₱45,000 to surcharge and interest computed from that missed deadline forward.

Frequently Asked Questions #

Can I pay my BIR annual income tax in installments? #

An individual taxpayer whose income tax due on the annual return exceeds ₱2,000 may elect to pay in two equal installments under NIRC Section 56(A)(2): the first installment at the time the return is filed, and the second on or before October 15 following the close of the calendar year.

Does the installment option apply to corporations? #

Section 56(A)(2) is written for individual taxpayers filing their annual income tax return. Corporate taxpayers follow their own separate quarterly and annual income tax payment structure under different NIRC provisions and are not covered by this specific two-installment option.

What happens if I miss the October 15 second installment? #

A missed or late second installment is treated as a deficiency for that unpaid portion, exposing the taxpayer to surcharge and interest on the amount still due, calculated from the original due date of that installment rather than from October 15 forward only. Paying late does not avoid the penalties that apply to any other late tax payment.

Do I need to file anything special to use the two-installment option? #

The election is generally made by how the annual income tax return itself is completed and filed — indicating a split payment rather than paying the full amount at once — followed by a second payment via BIR Form 0605 referencing the same return and period by October 15. Confirm the current eBIRForms or eFPS workflow for marking a return as an installment payment before relying on this election for a specific filing.

Is there a minimum tax due before installment payment is even relevant? #

Yes — the option only applies once the tax due exceeds ₱2,000. Below that threshold, the annual income tax due is paid in full with the return; there is no partial-payment mechanic for smaller amounts under this specific provision.

Summary #

NIRC Section 56(A)(2) lets an individual with more than ₱2,000 in annual income tax due split the payment in half — the first half at filing, the second by October 15 — without needing any special BIR approval, but a missed second installment carries the same surcharge and interest exposure as any other late payment. Start with How to File BIR Form 1701A for the underlying return.