Higher take home pay in 2023 with new income tax deductions
We vividly remember a few years ago the horrendous income taxes we, hardworking employees, pay to government. We always cried “holdup” as these “sweat and tears” money are immediately withheld in our payroll accounts.
In that old taxation setup of 2015, an employee earning P20,000 a month or a yearly income of P240,000 are deducted with P57,000 tax every year. Those earning P30,000 a month or an annual income of P360,000 are taxed P98,000. Those with higher salary for example, P50,000 a month or an annual salary of P 600,000, pays P157,000 to the BIR. And if you are earning P90,000 a month or P 1,080,000 a year, government gets nearly half of your annual salary or P415,000.
But thank God, everything changed in 2018 when Duterte’s TRAIN LAW took effect.
Everybody got their tax windfall.
Those earning P250,000 a year or P20,833 became exempted from income taxes. This means that his/her yearly tax liability of P57,500 is now added take home pay. The same goes for those earning P30,000 a month, who paid a lesser tax of only P23,800 resulting in a P74,200 savings. I also calculated those earning P50,000 a month who paid a lesser P80,000 annual tax or a take home savings of P67,000. Those earning P90,000 paid a lesser tax of P 310,000, which means a savings of P105,000.
In effect, all these former tax money became additional incomes for all Filipino families that year, not from their individual employers or companies but from the national government who decided to cut income taxes and increase VAT collection. Because of lesser withheld taxes, their salaries went fatter. Some then engaged on spending sprees or bought home lots, cars personal luxuries and investments. No wonder, a lot of employees responded positively to the past administration.
Now a second tax adjustment is coming this January 1, 2023, again under the same TRAIN LAW. This means additional take home pay again for our hardworking people. Those earning P20,000 a month remains exempted. Those receiving 30,000 a month above takes home a lesser tax of P5,800, while those earning P50,000 a month receives P18,500 lesser tax. Managers or supervisors with P 90,000 monthly earnings, will take home P67,500 because of lower taxes.
But there is an interesting twist here, for example, a CEO who is earning P1M a month or P12M a year. Under the old tax set-up of 2015, he paid a total annual tax of P3,805,000.
But under the new 2023 rules, that CEO will be paying a lesser amount despite a higher 35 percent tax from the previous 32 percent. From my calculations, this CEO will only pay P3,602,500 or a savings of P202,500. Perhaps, this may be strategy for our government financial wizards, and I will leave it at that, but will watch very closely.
This reaffirms my earlier assessment that not only the lowliest workers or employees benefited from this income tax windfall, but also the high salaried leaders in government and the private sector. Indeed, everybody happy and prosperous new year ahead.
REVENGE TRAVEL THIS CHRISTMAS
Before and after Christmas day, our kababayans exhibited their “travel and shopping revenge” around the country . My family chose to avoid international travel and decided to spend our holidays in the Tagaytay city area, which also had cold weather, interesting sights, and excellent cuisines.
First stop was the Camper and Cabin Airbnb along Batulao Road, Calaca, Batangas which has a sweeping 360-degree view of Mt Batulao, Nasugbu’s farmlands and Balayan Bay. We stayed
inside a spacious mountainside cabin perched atop a hill, but with hotel like facilities. One can light up bonfires or grill your food while watching the sunset on a swing.
Of course, the historic Taal Vista Hotel, offers the best panorama of the ash covered volcano. Breakfast was great, and for lunch or dinner, one can drive or choose from among the rated restaurants along the famous Tagaytay Ridge or around the Sky ranch. We also had the opportunity to visit the pink Sisters church and later shop at the Acienda Designer outlet stores in Silang, Cavite.
On Christmas eve, we transferred to our favorite, the luxurious Anya Resorts Hotel along Buenavista Hills Road, that offers relaxation, rejuvenation, away from the hustle and bustle of city life. Great food, hot pool, and the best Filipino hospitality of its staff. It was as if we travelled to Niseko, Japan or in Europe.
But what was surprising was the unbelievable speed of our return to Quezon city yesterday. My daughter who drove, tweeted this, “left Tagaytay city at 11:17 am, here in Tomas Morato QC, at 1:34pm”.
“Not bad, Skyway and Calax!”. Well, that was indeed a breeze, a total of 2 hours and 17 minutes. Please make sure you have functioning and updated RFIDs, and of course, prayer not to be involved in accidents.
A Blessed and Happy New Year to all of us!
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