Freelancer Tax Calculator Philippines: 8% vs Graduated
Freelancer, online seller, VA, or professional? Enter what you earn and see your tax under the 8% flat rate and the graduated rates (with the 40% OSD or itemized expenses, plus the 3% percentage tax). We show which one costs you less, per year and per quarter.
Estimate only, not tax advice. Based on the TRAIN law (RA 10963) graduated table for 2023 onward and the 3% percentage tax in force since July 1, 2023. Confirm with BIR or a CPA before you file.
About ₱9,400 per quarter (5.2% of gross). That's ₱12,900 less than the next-best option.
Also have a salary? See your job's take-home in the take-home pay calculator.
8% vs graduated at common incomes
Yearly tax for a purely self-employed freelancer with no itemized expenses:
| Yearly gross | 8% option | Graduated + OSD + 3% | 8% saves |
|---|---|---|---|
| ₱300,000₱25,000/month | ₱4,000 | ₱9,000 | ₱5,000 |
| ₱500,000₱41,667/month | ₱20,000 | ₱22,500 | ₱2,500Itemized wins only above ₱217,000 expenses |
| ₱750,000₱62,500/month | ₱40,000 | ₱55,000 | ₱15,000Itemized wins only above ₱384,000 expenses |
| ₱1,000,000₱83,333/month | ₱60,000 | ₱92,500 | ₱32,500Itemized wins only above ₱563,000 expenses |
| ₱1,500,000₱125,000/month | ₱100,000 | ₱172,500 | ₱72,500Itemized wins only above ₱938,000 expenses |
| ₱2,000,000₱166,667/month | ₱140,000 | ₱262,500 | ₱122,500Itemized wins only above ₱1,313,000 expenses |
| ₱3,000,000₱250,000/month | ₱220,000 | ₱442,500 | ₱222,500Itemized wins only above ₱2,091,000 expenses |
How each option works
- 8% flat tax: 8% of gross receipts. Purely self-employed? The first ₱250,000 is tax-free. It replaces both the graduated income tax and the 3% percentage tax, so you file less. Only for non-VAT taxpayers earning ₱3M or less.
- Graduated + 40% OSD: you're taxed on 60% of gross on the 0–35% table, and you also pay 3% percentage tax on gross. No receipts needed for the deduction.
- Graduated + itemized: you're taxed on gross minus actual business expenses, plus 3% percentage tax. Needs receipts and books of accounts. Pays off only when expenses are very high.
Deadlines to remember
- Quarterly income tax (1701Q): May 15, August 15, November 15. Elect 8% on the first one of the year.
- Annual return (1701 or 1701A): April 15 of the following year.
- Percentage tax (2551Q): 25 days after each quarter, only if you're on graduated rates.
Freelance income is irregular, so set aside your tax every time a client pays. Park it in a high-yield digital bank until the quarter ends, and keep a bigger emergency fund (6 months or more) than salaried workers do. Freelancers pay SSS as self-employed members, so check what that buys you in the SSS pension calculator.
Frequently asked questions
What is the 8% income tax option in the Philippines?
Self-employed individuals and professionals (freelancers, online sellers, consultants) with gross sales or receipts of ₱3,000,000 or less who are not VAT-registered can pay a flat 8% on gross receipts instead of the graduated income tax AND the 3% percentage tax. If you are purely self-employed, the first ₱250,000 is deducted before applying 8%.
Is 8% or graduated better for freelancers?
For most Filipino freelancers, 8% is lower. Up to ₱3M gross it always beats the graduated rates with the 40% optional standard deduction (OSD), because graduated also adds the 3% percentage tax. Graduated with itemized deductions only wins when your documented business expenses are very high — usually more than half of your income.
How do I choose the 8% option?
Elect it on your first quarterly income tax return of the year (BIR Form 1701Q) or in your registration (BIR Form 1901, or an update through 1905). If you do not elect it, BIR treats you as a graduated-rate taxpayer for the whole year, and you cannot switch mid-year.
I have a job and a side hustle. Can I still use 8%?
Yes. Mixed-income earners can use 8% on their business or freelance income, but without the ₱250,000 deduction (your salary already uses the zero-tax bracket). Your salary stays on the graduated table and your employer keeps withholding on it.
What is the 3% percentage tax?
A business tax on gross sales or receipts for non-VAT taxpayers (Section 116 of the Tax Code). It was temporarily 1% from July 2020 to June 2023 under CREATE and returned to 3% on July 1, 2023. Choosing the 8% option replaces it.
What happens if I earn more than ₱3 million?
You can no longer use the 8% option and must register for 12% VAT. You are taxed on the graduated rates (with OSD or itemized deductions) and file VAT returns instead of percentage tax.
Educational estimate only, not tax, legal, or accounting advice. It excludes VAT, non-operating income, withholding by clients (Form 2307 credits), and local business taxes. Rules can change; confirm with BIR (bir.gov.ph) or a licensed CPA.
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