How to Compute Withholding Tax on Compensation Using the BIR Withholding Tax Table
The Bureau of Internal Revenue’s withholding tax table for compensation — currently Annex E of Revenue Regulations (RR) No. 11-2018, effective January 1, 2023 — is the bracket schedule employers use to determine how much income tax to deduct from an employee’s pay each period. It mirrors the graduated individual income tax rates under the TRAIN Law (Republic Act No. 10963), with compensation up to ₱250,000 a year exempt and progressively higher rates above that.
This guide explains how to read the table and apply it to a payroll run. For the monthly return employers file to remit what they withhold, see BIR Form 1601-C; for the year-end certificate reconciling annual withholding, see What Is BIR Form 2316.
Generate Accurate BIR Form 2316 Certificates FREE →Which table applies right now? #
The current withholding tax table on compensation is Annex E of RR No. 11-2018, effective January 1, 2023 onward, and it has not been superseded by a later BIR issuance as of this writing. RR No. 11-2018 originally implemented the TRAIN Law’s compensation withholding rules with two schedules: one effective 2018–2022, and a second, lower-rate schedule effective 2023 onward that matches the individual income tax brackets that took final effect that year. Employers computing withholding today use the 2023-onward schedule.
| Annual taxable compensation | Withholding tax rate |
|---|---|
| Not over ₱250,000 | 0% |
| Over ₱250,000 but not over ₱400,000 | 15% of the excess over ₱250,000 |
| Over ₱400,000 but not over ₱800,000 | ₱22,500 + 20% of the excess over ₱400,000 |
| Over ₱800,000 but not over ₱2,000,000 | ₱102,500 + 25% of the excess over ₱800,000 |
| Over ₱2,000,000 but not over ₱8,000,000 | ₱402,500 + 30% of the excess over ₱2,000,000 |
| Over ₱8,000,000 | ₱2,202,500 + 35% of the excess over ₱8,000,000 |
How is the table actually applied to a payroll run? #
An employer applies the bracket schedule that matches its actual payroll frequency — daily, weekly, semi-monthly, or monthly — to each period’s taxable compensation, rather than computing tax once a year. The BIR publishes the Annex E table in all four period versions with pro-rated bracket boundaries, so a semi-monthly payroll uses the semi-monthly version of the table, not the annual figures divided informally.
Taxable compensation for this purpose is gross pay for the period, less mandatory employee contributions (SSS, PhilHealth, Pag-IBIG) and any tax-exempt de minimis benefits within BIR limits — see De Minimis Benefits for the current per-item ceilings. The 13th month pay and other bonuses are excluded from regular payroll withholding entirely up to a combined ₱90,000 per year under the TRAIN Law; only the amount exceeding ₱90,000 is added back to taxable compensation and subjected to withholding — see Is 13th Month Pay Taxable? for that threshold in detail.
Worked example: semi-monthly payroll #
An employee earning ₱45,000 a month (₱22,500 per semi-monthly cutoff) has no other taxable compensation for the period. Converting the monthly table above to its semi-monthly equivalent (each bracket boundary halved):
| Item | Amount |
|---|---|
| Semi-monthly gross pay | ₱22,500.00 |
| Less: SSS/PhilHealth/Pag-IBIG contributions (approx.) | ₱1,125.00 |
| Taxable compensation for the period | ₱21,375.00 |
| Semi-monthly exempt threshold (₱250,000 ÷ 24) | ₱10,416.67 |
| Excess over the exempt threshold | ₱10,958.33 |
| Withholding tax (15% of excess, semi-monthly bracket) | ₱1,643.75 |
The employer withholds approximately ₱1,643.75 that cutoff, remits it monthly through BIR Form 1601-C, and, at year-end, reconciles all twenty-four cutoffs against the employee’s actual annual tax due on BIR Form 2316 — any shortfall or excess is adjusted in the December payroll, per RR No. 11-2018’s annualization requirement.
Frequently asked questions #
What withholding tax table do employers currently use? #
Employers use the withholding tax table in Revenue Regulations No. 11-2018, Annex E, which took effect January 1, 2023 and aligned withholding tax brackets with the individual income tax rates set by the TRAIN Law (Republic Act No. 10963) for 2023 onward.
Up to how much compensation is exempt from withholding tax? #
Under the current table, an employee with taxable compensation up to ₱250,000 a year (converted to the applicable payroll period) is subject to 0% withholding tax — no tax is withheld at that level.
Is 13th month pay included when computing withholding tax on compensation? #
No, not up to the exempt threshold. The 13th month pay and other statutory and de minimis-adjacent bonuses are exempt from withholding up to ₱90,000 combined per year under the TRAIN Law; only the excess over ₱90,000 is added to taxable compensation.
Does the withholding tax table apply per payroll period or per year? #
The BIR publishes the table in several versions — daily, weekly, semi-monthly, and monthly — so an employer applies the bracket that matches its actual payroll frequency to each pay period’s taxable compensation, rather than computing tax on an annualized basis every cutoff.
Where does BIR Form 2316 fit into this computation? #
BIR Form 2316 is the year-end certificate that reconciles the sum of all withholding tax actually deducted per payroll period against the employee’s true annual tax due, showing any refund or additional tax collected in the December payroll.
Summary #
Compensation withholding runs on the Annex E table under RR No. 11-2018, effective 2023 onward: ₱250,000 a year exempt, then graduated rates up to 35%, applied per actual payroll period rather than annually. Get the period, the exempt bracket, and the 13th-month exclusion right, and the monthly BIR Form 1601-C remittance and year-end BIR Form 2316 reconciliation follow directly from the same numbers — see BIR Form 1601-C and What Is BIR Form 2316 for those next steps.