With almost all the prices of basic commodities going up and the non-stop upsurge in the price of oil, lawmakers saw it fit to pass a tax relief bill for workers with the House of Representatives agreeing to have the Senate version sent directly to the President for signing. Once signed by the president, the bill will be a law granting wage earners with lower income taxes as its main objective.
Wage earners could not escape the burden of tax since every pay day, they are being withheld from their salaries. With the tax relief bill being hurried into law, wage earners could enjoy a higher personal exemption of P50,000 as compared to the current exemptions of P20,000 for single workers, P25,000 for head of a family and P32,000 for married workers. Moreover, the additional personal exemption for qualified dependents of P8,000 each for up to four dependents will be raised to P25,000.
This goes to show that if you’re currently earning P10,000 a month and a single worker, your corresponding monthly tax (if the tax rates will not change) based on the tax relief will be more or less P708 only, saving around P500 a month as compared to using the current exemption rates. This is actually a relief for those who are earning purely compensation income as they would have higher take home pay every payroll.
Definitely, the Senate version that is also being adopted by the lower house is also leveling the privileges of wage earners to corporations and self-employed individuals by increasing the optional stardard deduction (OSD) to 40% from the current 10% for the latter’s benefit. That means that professionals and corporations will have more reason to do away with itemized deduction.
LOL. Based on my computations, I would have approximately 12% tax reduction. Well, all goes to savings.