1. What is Income Tax Splitting?

Income tax splitting in the Philippines refers to the process of calculating tax obligations based on taxable income after deducting allowable exemptions and applying the appropriate tax rate.

2. How Does the Calculator Work?

The calculator uses the basic tax formula:

Where:

• \( Income \) — Gross income in Philippine Pesos
• \( Allowance \) — Tax-exempt amount or deductions
• \( Rate \) — Applicable tax rate percentage

Explanation: The calculator first deducts the allowance from the income to get taxable income, then applies the tax rate to calculate the tax due.

3. Importance of Tax Calculation

Details: Accurate tax calculation helps individuals and businesses comply with Philippine tax laws, avoid penalties, and plan their finances effectively.

4. Using the Calculator

Tips: Enter your total income in PHP, any applicable allowances or deductions in PHP, and the tax rate as a percentage. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What counts as allowance in Philippine tax law?
A: Allowances may include personal exemptions, additional exemptions for dependents, and other deductions allowed by the BIR.

Q2: How often should I calculate my taxes?
A: For employees, taxes are typically withheld monthly. Self-employed individuals should calculate quarterly.

Q3: Where can I find the official tax rates?
A: The Bureau of Internal Revenue (BIR) website provides the latest tax tables and rates.

Q4: Are there different tax rates for different income levels?
A: Yes, the Philippines uses a progressive tax system with rates increasing with income levels.

Q5: Can this calculator be used for business taxes?
A: This provides a basic calculation. Business taxes may have additional complexities and deductions.