Whether you’re a business owner, an employee, or a side hustler, staying ahead of your taxes is always a smart move. The key to a better year is planning ahead to keep your finances healthy and running smoothly. To prepare ahead, here are the things you need to know about taxes and contributions for 2026.
No Changes in Tax Rates
BIR sets income tax rates based on your net taxable income. This means you only pay taxes on what you earn after those deductions. Here’s the BIR tax table 2026 to help you compute how much tax you’ll pay:
| Amount of Net Taxable Income (PHP) | Tax Rate |
| ₱250,000 and below | 0% |
| Over ₱250,000 – ₱400,000 | 15% of the excess over ₱250,000 |
| Over ₱400,000 – ₱800,000 | ₱22,500 + 20% of the excess over ₱400,000 |
| Over ₱800,000 – ₱2,000,000 | ₱102,500 + 25% of the excess over ₱800,000 |
| Over ₱2,000,000 – ₱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 |
Tax Rate Options To Choose
Business taxpayers have flexibility when it comes to computing their income tax. Here are the options you can choose from:
1. 8% Income Tax Rate
This is ideal for small businesses with minimal expenses.
The tax is based on your gross sales or receipts after deducting the ₱250,000 exemption.
For mixed-income earners, the ₱250,000 exemption is already applied to your employee compensation, so it can no longer be deducted from your business income.
2. Optional Standard Deduction (OSD)
Instead of listing down all your expenses, you can automatically deduct 40% of your gross sales or receipts.
This simplifies the process, but it may not always result in lower taxes.
3. Itemized Deduction
With this option, you deduct your actual business expenses from your income to reduce your taxable amount.
However, this requires proper documentation and detailed records of all expenses.
4. BMBE (Barangay Micro Business Enterprise)
This applies to sole proprietors with total business assets not exceeding ₱3 million, excluding land.
If your business qualifies as a BMBE, you may enjoy income tax exemptions.
Businesses under this category usually operate on a micro scale and serve local markets.
Choosing the right tax option depends on your business size, income level, and expenses. It’s best to consult an accountant or tax expert to determine what works best for your situation.
Government Contributions for Financial Cushion
Aside from paying taxes, contributing to programs like SSS, PhilHealth, and Pag-IBIG can help you reach your goals, such as buying a house, taking care of your health, and building a financial cushion for retirement. These contributions help protect your future and give you peace of mind. Here are the contribution allotments for 2026:
1. SSS Contributions
The SSS contribution rate for 2026 is 15%.
- Employers shoulder 10%, while employees contribute 5%.
- Self-employed or voluntary contributors pay the full 15%.
Check the latest SSS contributions here: SSS Contribution Table
2. PhilHealth Contributions
The PhilHealth premium rate stays at 5%, with a minimum monthly contribution of ₱500 and a maximum of ₱5,000.
- Employers and employees continue to share the contribution equally.
- Self-employed individuals pay the full amount.
3. Pag-IBIG Contributions
Pag-IBIG contributions remain 2% of your monthly salary, with the employer matching your contribution.
- Maximum monthly compensation considered is ₱10,000, making the maximum contribution ₱200 each for employer and employee.
- Voluntary payers contribute a total of ₱400 per month.
Make sure to contribute regularly to cover for emergencies, healthcare, and savings benefits for you to be prepared for a better future.
Planning For The Year Ahead
- Check Your Payroll
Employers should update payroll systems to match the latest tax rates and contribution percentages. Employees, take a look at your payslips to make sure deductions are correct. - Plan Your Budget
Make sure your budget has enough margin to cover unexpected changes in tax rates, contribution amounts, or other expenses. Planning ahead helps you stay stress-free. - Ask for Help if Needed
If you’re unsure about the calculations or how these updates affect you, talk to a CPA or financial advisor. They can help you plan and make the most of your money.