Tax2 min read · Updated October 21, 2026
Freelancer tax in the Philippines: 8% or graduated rates?
How freelancers in the Philippines choose between the 8% tax on gross receipts and graduated rates with the 40% standard deduction, with worked examples at three income levels.
The two options
8% option: 8% of gross receipts above ₱250,000 (no ₱250,000 deduction if you also have a salary). It replaces the graduated income tax and the 3% percentage tax.
Graduated rates: normal rates on income after expenses (or a 40% standard deduction), plus 3% percentage tax on gross receipts.
Three examples
| ₱400,000 receipts | 8%: ₱12,000 · Graduated: ₱12,000 |
| ₱900,000 receipts | 8%: ₱52,000 · Graduated: ₱77,500 |
| ₱2,500,000 receipts | 8%: ₱180,000 · Graduated: ₱352,500 |
When graduated can win
If your real costs are much higher than 40% of receipts, itemising costs can lower graduated tax. Check both using your actual figures.
How to choose
You choose when you file your first quarterly return, and the choice generally stays for the year. Register with the BIR, issue receipts and keep records.
Common questions
Who can use the 8% option?
Individuals with gross receipts of ₱3 million or less.
Is the ₱250,000 deduction automatic?
It applies to purely self-employed individuals, not to people who also earn a salary.
Do I still pay percentage tax with 8%?
No. The 8% replaces it.