This year, Filipino employees are expected to receive higher take-home pay as the Tax Reform for Acceleration and Inclusion (TRAIN) takes effect. For those with limited budget, this can be an opportunity to save more as they see adjustments in their salaries. Others who have been wanting to invest can put their additional take-home pay in different investment instruments such as life and health insurance, mutual funds, stocks and crowd funding.
Before we go into details on how Filipino employees can make their additional money work for them, let’s learn more about the 2018 TRAIN.
The Tax Reform for Acceleration and Inclusion (TRAIN)
The Tax Reform for Acceleration and Inclusion (TRAIN) is the first part of the Duterte Administration’s Comprehensive Tax Reform Program (CTRP) that aims to provide Tax Reform for Acceleration and Inclusion Filipinos with “a more just, simple, and more effective” tax system.
The primary goal of the tax reform is to achieve higher middle-income status and ultimately, reduce the poverty rate from 26% to 17% by 2020, where some 10 million Filipinos will be uplifted from poverty.
Since TRAIN has been implemented on January 1, 2018, here’s what you can expect:
- Lower Personal Income Tax (PIT) rates, thus higher take-home salary
- Simpler estate and donor’s tax system
- Expanded Value-Added Tax (VAT) base
- Higher excise tax of petroleum products
- Higher auto excise tax
- Higher taxes for sugar-sweetened beverages
If you’re wondering how the new tax reform program will benefit you, use this income tax calculator to determine your income tax last year and the new income tax this 2018. This will help you see how much your take-home pay has increased.
Should you want to compute for your income tax manually, here’s a breakdown of the new Personal Income Tax (PIT) under TRAIN: