Freelancer tax calculator
8% or graduated? Enter what you earn from clients and see which BIR option leaves you more, how much to set aside each month, and what each quarterly payment comes to.
Your better option
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| Item | 8% option | Graduated |
|---|
- Choosing 8%: opt in on your first-quarter 1701Q (due May 15) or when you register. It applies for the whole year. If you don't opt in, BIR treats you as graduated.
- Quarterly payments are an even split for illustration. The actual 1701Q figures are cumulative, and graduated filers also file 2551Q for percentage tax.
- Not included: SSS, PhilHealth, and Pag-IBIG (self-employed pay the full rate themselves), the annual registration of books, and VAT.
Keep a copy for your records or send it to HR.
Computed with Rebas · rebas.co/freelancer-tax-calculator-philippines/ · . Estimates only; confirm official figures with your employer or the agency concerned.
In short
- 8% option: 8% × (gross receipts − ₱250,000). It replaces both graduated income tax and the 3% percentage tax. Only for gross receipts of ₱3,000,000 or less a year.
- Graduated: TRAIN income tax brackets on net income (gross minus 40% optional standard deduction or receipted expenses), plus 3% percentage tax on gross.
- Example: a freelancer earning ₱50,000 a month (₱600,000 a year) with no itemized expenses pays ₱28,000 a year on 8%, against ₱34,500 on graduated + 3%.
- 8% is usually cheaper unless real expenses are well above 40% of income. Choose it on the first-quarter BIR Form 1701Q (due May 15); the choice holds for the year.
- Mixed-income earners (salary plus freelance) can use 8% on the freelance part, but without the ₱250,000 deduction.
8% vs graduated: how each is computed
8% option: 8% × (gross receipts − ₱250,000). That one payment replaces both income tax and the 3% percentage tax. Mixed-income earners skip the ₱250,000 deduction.
Graduated: TRAIN income tax brackets on net income (gross minus 40% OSD or itemized expenses), plus 3% percentage tax on gross receipts, filed separately on BIR Form 2551Q.
Here is what a full-time freelancer with no itemized expenses would pay in a year:
| Monthly income | 8% option | Graduated + 3% | 8% saves |
|---|---|---|---|
| ₱30,000 | ₱8,800 | ₱10,800 | ₱2,000 |
| ₱50,000 | ₱28,000 | ₱34,500 | ₱6,500 |
| ₱100,000 | ₱76,000 | ₱122,500 | ₱46,500 |
| ₱200,000 | ₱172,000 | ₱334,500 | ₱162,500 |
Graduated wins when expenses are high. With ₱600,000 gross and ₱400,000 of receipted expenses, graduated comes to ₱18,000 against ₱28,000 on 8%.
Who can't use 8%
You can't use the 8% option if your gross receipts and other non-operating income go over ₱3,000,000 in the year, if you are VAT-registered, or if you're a partner in a general professional partnership earning through the partnership. Above ₱3,000,000 you must register for VAT and pay graduated income tax.
Earning a salary instead? The tax calculator covers employed take-home with SSS, PhilHealth, and Pag-IBIG. To compare a client's USD rate with a local offer, try the salary converter.
Frequently asked questions
What is the 8% income tax option?
Self-employed people and professionals whose gross sales or receipts are ₱3,000,000 or less a year can pay a flat 8% on gross instead of graduated income tax plus 3% percentage tax. If you have no salary from an employer, the first ₱250,000 is deducted before the 8% is applied.
Is 8% or graduated better for freelancers?
For most freelancers with few expenses, 8% costs less, because graduated filers also pay 3% percentage tax on gross. Graduated can win when your real, receipted expenses are well over 40% of your income, or when your income is low enough that the 8% and graduated amounts are close.
How do I choose the 8% option?
Tick the 8% option on your first-quarter income tax return (BIR Form 1701Q, due May 15), or choose it when you register with BIR. The choice holds for the whole year. If you don't choose it, you are taxed at graduated rates.
I have a job and freelance on the side. Can I use 8%?
Yes, on the freelance income only. Your salary is still taxed at graduated rates through your employer. The difference is that mixed-income earners don't get the ₱250,000 deduction on the 8%, because the zero-tax bracket is already used by the salary. Turn on "I also have a regular job" in the calculator.
What is the 40% optional standard deduction (OSD)?
Under graduated rates you can deduct either your actual business expenses (itemized, with receipts and books) or a flat 40% of gross receipts without proof of expenses. The calculator uses whichever is larger.
I'm paid in US dollars. How is that taxed?
Your income is taxed in pesos. Choose USD and the calculator converts at the rate in the site's published rate file. For your actual return, use the peso amount you received for each payment.
Does this include SSS, PhilHealth, and Pag-IBIG?
No. Self-employed members pay the full SSS and PhilHealth rates themselves, and they are separate from income tax. Those contributions are not deductible under the 8% option.