Section 5Sec./Art. 5

Section 24 of the NIRC, as amended, is hereby further amended to read as follows:

"Sec. 24. Income Tax Rates. -

"(A) Rates of Income Tax on Individual Citizen and Individual, Resident Alien of the Philippines -

"(1) An income tax is hereby imposed:

"(a) On the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections (B), (C), and (D) of this Section, derived for each taxable year from all sources within and without the Philippines by every individual citizen of the Philippines residing therein;

"(b) On the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections (B), (C), and (D) of this Section, derived for each taxable year from all sources within the Philippines by an individual citizen of the Philippines who is residing outside of the Philippines including overseas contract workers referred to in Subsection (C) of Section 23 hereof; and

"(c) On the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections (B), (C), and (D) of this Section, derived for each taxable year from all sources within the Philippines by an individual alien who is a resident of the Philippines.

"(2) Rates of Tax on Taxable Income of Individuals. - The tax shall be computed in accordance with and at the rates established in the following schedule:

"(a) Tax Schedule Effective January 1, 2018 until December 31, 2022:

"Not over ₱250,000

0%

"Over ₱250,000 but not over ₱400,000

20% of the excess over ₱250,000

"Over ₱400,000 but not over ₱800,000

₱30,000 + 25% of the excess over ₱400,000

"Over ₱800,000 but not over ₱2,000,000

₱130,000 + 30% of the excess over ₱800,000

"Over ₱2,000,000 but not over ₱5,000,000

₱490,000 + 32% of the excess over ₱2,000,000

"Over ₱8,000,000

₱2,410,000 + 35% of the excess over ₱8,000,000

"Tax Schedule Effective January 1, 2023 and onwards:

"Not over ₱250,000

0%

"Over ₱250,000 but not over ₱400,000

15% of the excess over ₱250,000

"Over ₱400,000 but not over ₱800,000

₱22,500 + 20% of the excess over ₱400,000

"Over ₱800,000 but not over ₱2,000,000

₱102,500 + 25% of the excess over ₱800,000

"Over ₱2,000,000 but not over ₱8,000,000

₱402,500 + 30% of the excess over ₱2,000,000

"Over ₱8,000,000

₱2,202,500 + 35% of the excess over ₱8,000,000

"For married individuals, the husband and wife, subject to the provision of Section 51(D) hereof, shall compute separately their individual income tax based on their respective total taxable income: Provided, That if any income cannot be definitely attributed to or identified as income exclusively earned or realized by either of the spouses, the same shall be divided equally between the spouses for the purpose of determining their respective taxable income.

"Provided, That minimum wage earners as defined in Section 22(HH) of this Code shall be exempt from the payment of income tax on their taxable income: Provided, further, That the holiday pay, pay received by such minimum wage earners shall likewise be exempt from income tax.

"(b) Rate of Tax on Income of "Purely Self-employed Individuals and/ or Professionals Whose Gross Sales or Gross Receipts and Other Non-operating Income Does Not Exceed the Value-added Tax (VAT) Threshold as Provided in Section 109(BB). Self-employed individuals and/or professionals shall have the option to avail of an eight percent (8%) tax on gross sales or gross receipts and other non-operating income in excess of Two hundred fifty thousand pesos (₱250,000) in lieu of the graduated income tax rates under Subsection (A)(2)(a) of this Section and the percentage tax under Section 116 of this Code.

"(c) Rate of Tax for Mixed Income Earners. Taxpayers earning both compensation income and income from business or practice of profession shall be subject to the following taxes:

"(1) All Income from Compensation The rates prescribed under Subsection (A)(2)(a) of this Section.

"(2) All Income from Business or Practice of Profession

"(a) If Total Gross Sales and/or Gross Receipts and Other Non-operating Income Do Not Exceed the VAT Threshold as Provided in Section 109(BB) of this Code. The rates prescribed under Subsection (A)(2)(a) of this Section on taxable income, or eight percent (8%) income tax based on gross sales or gross receipts and other non-operating income in lieu of the graduated income tax rates under Subsection (A)(2)(a) of this Section and the percentage tax under Section 116 of this Code.

"(b) If Total Gross Sales and/or Gross Receipts and Other Non-operating Income Exceeds the VAT Threshold as Provided in Section 109(BB) of this Code. The rates prescribed under Subsection (A)(2)(a) of this Section.

"(B) Rate of Tax on Certain Passive Income.

"(1) Interests, Royalties, Prizes, and Other Winnings.

A final tax at the rate of twenty percent (20%) is hereby imposed upon the amount of interest from any currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and. similar arrangements; royalties, except on books, as well as other literary works and musical compositions, which shall be imposed a final tax of ten percent (10%); prizes (except prizes amounting to Ten thousand pesos (₱10,000) or less which shall be subject to tax under Subsection (A) of Section 24; and other winnings (except winnings amounting to Ten thousand pesos (₱10,000) or less from Philippine Charity Sweepstakes and Lotto which shall be exempt), derived from sources within the Philippines: Provided, however, That interest income received by an individual taxpayer (except a nonresident individual) from a depository bank under the expanded foreign currency deposit system shall be subject to a final income tax at the rate of fifteen percent (15%) of such interest income: Provided, further, That interest income from long-term deposit or investment in the form of savings, common or individual trust funds, deposit substitutes, investment management accounts and other investments evidenced by certificates in such form prescribed by the Bangko Sentral ng Pilipinas (BSP) shall be exempt from the tax imposed under this Subsection: Provided, finally, That should the holder of the certificate pre-terminate the deposit or investment before the fifth (5th) year, a final tax shall be imposed on the entire income and shall be deducted and withheld by the depository bank from the proceeds of the long-term deposit or investment certificate based on the remaining maturity thereof:

"x x x."

"(2) Cash and/or Property Dividends. - A final tax at the rate of ten percent (10%) shall be imposed upon the cash and/or property dividends actually or constructively received by an individual from a domestic corporation or from a joint stock company, insurance or mutual fund companies and regional operating headquarters of multinational companies, or on the share of an individual in the distributable net income after tax of a partnership (except a general professional partnership) of which he is a partner, or on the share of an individual in the net income after tax of an association, a joint account, or a joint venture or consortium taxable as a corporation of which he is a member or co-venturer.

"(C) Capital Gains from Sale of Shares of Stock not Traded in the Stock Exchange. - The provisions of Section 39(B) notwithstanding, a final tax at the rate of fifteen percent (15%) is hereby imposed upon the net capital gains realized during the taxable year from the sale, barter, exchange or other disposition of shares of stock in a domestic corporation, except shares sold, or disposed of through the stock exchange.

"x x x."