8% or graduated? Know in 10 seconds.

How the two options work

The 8% option. If your gross sales/receipts are ₱3,000,000 or below for the year, you can elect to pay a flat 8% on gross receipts above ₱250,000 — and that's it. No percentage tax, no expense tracking, one simple computation. You elect it on your first quarterly return of the year (2551Q or 1701Q), and the election is irrevocable for that year.

The graduated option. You pay income tax on your net income (gross minus deductions) using the tax table below, plus the 3% quarterly percentage tax on gross receipts (2551Q) if you're non-VAT. Deductions are either itemized (actual expenses, with receipts) or the Optional Standard Deduction — an automatic 40% of gross, no receipts required.

Graduated income tax table (2023 onwards, TRAIN Law)

Rule of thumb

• Low expenses (freelancers, consultants, online service providers): 8% almost always wins.
• High expenses (resellers, food businesses, anyone with big cost of goods): graduated with itemized deductions often wins.
• In between: that's exactly what the calculator above is for.

2026 BIR deadlines to mark

*Statutory dates falling on a weekend move to the next business day. Always confirm against the latest BIR advisories.

Disclaimer: This calculator is a computation aid, not tax advice. Figures follow the TRAIN Law schedule in effect since January 1, 2023. For edge cases — VAT registration, multiple lines of business, books of accounts questions — consult an accountant or your RDO.