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.

Which BIR form do I file, and when?

Picking 8% or graduated is only half the decision — it also changes which returns you file for the rest of the year. This is where most first-time freelancers get tripped up, because the forms have similar names and the deadlines don't line up with each other. Here's the whole set, in plain terms.

2551Q — quarterly percentage tax

This is the 3% tax on your gross receipts, and it applies if you are non-VAT registered (gross sales/receipts of ₱3,000,000 or below and you haven't voluntarily registered for VAT). The rate briefly dropped to 1% under the CREATE Act, but that relief ended on June 30, 2023 — it has been back at 3% since July 1, 2023.

The deadline rule is 25 days after the close of each quarter: April 25, July 25, October 25, and January 25 for the fourth quarter. Note that this is a calendar-quarter rule, not a 45-day rule — 2551Q is always due before the income tax return for the same quarter.

If you elected the 8% rate, you do not file 2551Q at all. The 8% is explicitly "in lieu of" both the graduated income tax and the percentage tax, so availing of it exempts you from filing and paying percentage tax (RR 8-2018, RMO 23-2018). You still file your quarterly and annual income tax returns. Two practical wrinkles worth knowing:

• You have to signify the 8% election every taxable year — it does not roll over automatically. You do it on the first quarterly return you file for the year (2551Q or 1701Q), or through a registration update on BIR Form 1905.
• The election is irrevocable for that taxable year. If you change your mind in Q3, you're still on 8% until December 31.
• If you never signified and the 2551Q form type is still active on your registration, your RDO may expect the return anyway. If you're switching to 8%, it's worth confirming your registered form types so an open 2551Q obligation doesn't quietly accrue penalties.

1701Q — quarterly income tax

Everyone with business or professional income files this one — 8% or graduated, it makes no difference. It's due on the 45th day after the close of each of the first three quarters, which in practice means May 15, August 15, and November 15. There is no fourth-quarter 1701Q; the annual return closes out the year instead.

Each quarter is cumulative: you report income year-to-date and credit whatever you already paid in earlier quarters. Under the 8% option, the ₱250,000 deduction is applied once across the year, not once per quarter — which is why the first quarter or two often shows zero tax due and the later quarters don't.

1701A vs 1701 — the annual return

Both are due April 15 of the following year. Which one you use depends on where your income comes from and how you compute deductions:

• 1701A — for individuals earning purely from business or profession (no employer), who are on either the 8% rate or graduated rates with the 40% Optional Standard Deduction. It's the short form: two pages, no financial statements needed for OSD or 8% filers.
• 1701 — for mixed-income earners (you have a job and freelance income), for purely self-employed individuals using itemized deductions, and for estates and trusts. It's the longer form, and itemized filers generally need to attach financial statements.

The shortcut: employed on the side, or itemizing → 1701. Otherwise → 1701A. If you're a mixed-income earner, also make sure you have your employer's BIR Form 2316, since the compensation figures and any tax already withheld carry into the 1701.

0605 — the ₱500 annual registration fee is gone

If you registered before 2024, you'll remember paying ₱500 every January via BIR Form 0605. That requirement was removed. The Ease of Paying Taxes Act (Republic Act No. 11976), signed on January 5, 2024, amended Section 236 of the Tax Code to drop the annual registration fee, and the BIR stopped collecting it in January 2024. Business taxpayers no longer file 0605 for the ARF and no longer pay the ₱500.

Two clarifications, because this one is still widely misreported:

• An existing Certificate of Registration that still shows the Registration Fee remains valid. You can have it updated or reissued without the ARF line at your convenience — it isn't urgent, and it isn't a penalty.
• Form 0605 itself still exists. It's the general payment form, so it's still used for things like paying penalties, deficiency assessments, and other one-time payments. It's the ₱500 annual fee that was abolished, not the form.

The same law also brought in the "file and pay anywhere" rule, and RR 4-2024 removed the old 25% wrong-venue surcharge — filing or paying at an office or bank outside your registered RDO is no longer penalised on that basis alone.

Your situation → your forms

The VAT row is simplified — once you cross ₱3M or register for VAT voluntarily, the 8% option is off the table and the compliance load changes materially (invoicing rules, input VAT, and more). That's the point to bring in an accountant.

How you actually file: eBIRForms and eFPS

The BIR runs two electronic channels, and which one you use isn't a preference — it's determined by your taxpayer classification.

• eBIRForms is the offline package you download, fill in, and submit online. This is what nearly every freelancer, sole proprietor, and small professional practice uses. You encode the return, hit Validate, then Submit, and the system emails you a Filing Reference Number or a Tax Return Receipt Confirmation. Keep that email — it is your proof of filing.
• eFPS is the fully online system, mandatory for specific groups the BIR has enrolled — large taxpayers, government bidders and contractors, and other categories named in BIR issuances. If you were never notified that you're an eFPS filer, you're almost certainly an eBIRForms filer.

Payment is a separate step from filing. Once the return is submitted you pay through an authorized agent bank, a Revenue Collection Officer, or an online channel such as GCash, Maya, LandBank Link.BizPortal, or DBP PayTax Online. Under the Ease of Paying Taxes Act's "file and pay anywhere" rule, you're no longer tied to the bank or office covering your RDO.

"No payment return" — and why a zero return is still required

A no payment return is a return where the tax due comes out to zero — you had no income that quarter, your income stayed under the ₱250,000 threshold, or credits and prior payments wiped out the balance. It sounds like nothing to do. It isn't.

You still have to file it. The obligation is to file the return, not to pay tax, and the two are separate. Zero returns and no-payment returns are still required to be filed electronically through eBIRForms (a narrow set of taxpayers — senior citizens and PWDs filing their own returns, and purely compensation earners — may still file manually at the RDO). Skipping a quarter because "I earned nothing" is one of the most common ways freelancers end up with open cases and penalties: the return is missing, and the failure to file is penalised regardless of the amount.

A related habit worth keeping: if you're registered for a form type, the BIR expects that form every period until you formally update your registration. Stopping freelance work does not stop the filing obligation — you either keep filing zero returns or close/update the registration through your RDO.

What happens if you file late

Late filing carries three separate charges under the Tax Code. They stack, and they apply to the return as filed — which is why filing late-but-soon costs far less than waiting.

A few things that are genuinely easy to get wrong here:

• The compromise penalty amounts vary, and published figures disagree. The schedule in RMO 7-2015 is a suggested amount for settling criminal liability out of court, tiered by the basic tax involved. Different RDOs and different violation types land on different rows. Don't budget from a number you read on a blog — ask your RDO or your accountant for the figure that applies to your specific case, and check whether a later BIR issuance has revised the schedule.
• Interest runs on the tax and the surcharge, and it accrues daily. Filing four days late and filing four months late are very different bills.
• Voluntary filing beats being caught. The gap between the 25% and 50% surcharge is largely about who moved first.
• The 25% wrong-venue surcharge no longer applies. RR 4-2024 removed it under the Ease of Paying Taxes Act — filing outside your RDO's jurisdiction is not, by itself, a penalised act any more.
• Penalties can sometimes be abated or compromised where there's a reasonable cause, but that's a formal application, not a phone call.

2026 BIR deadlines to mark

*Statutory dates falling on a weekend move to the next business day. Always confirm against the latest BIR advisories. Remember: if you elected the 8% rate for the year, the 2551Q rows don't apply to you.

Disclaimer. This calculator is a computation aid, not tax advice, and nothing on this page creates a professional relationship. Figures follow the TRAIN Law graduated schedule in effect since January 1, 2023, and the 3% percentage tax rate in effect since July 1, 2023. Philippine tax rules change often — the Ease of Paying Taxes Act (RA 11976) alone reshaped registration, filing venue, and penalty rules from 2024 onwards — and BIR issuances, deadline extensions, and penalty schedules are updated throughout the year. Verify every figure and date against the latest BIR revenue regulations, memorandum circulars, and advisories before you file. Penalty amounts in particular vary by case and by RDO; the shapes described above are the statutory ones, not a quote for your situation. For anything with edge cases — VAT registration, multiple lines of business, mixed income, books of accounts, open cases, or abatement — consult a CPA or your RDO.