TRAIN Law Compliance Guide (RA 10963)

Step-by-step overview of the TRAIN Law's main features and how individuals and businesses can stay compliant with income tax and related requirements in the Philippines.

What you’ll learn in this TRAIN Law guide

This TRAIN Law compliance guide for the Philippines explains the updated income tax rules, exemptions, and filing steps so you can understand how RA 10963 affects your salary, self-employment income, or small business.

For more detailed filing walkthroughs, also check our BIR 1701Q Filing Guide, BIR 1702Q Filing Guide, and Digital Tax Filing (eBIRForms) Guide.

To apply TRAIN rules in real numbers, you can use our free BIR Book of Accounts Tool to track income and expenses, together with our 13th Month Calculator to check how the tax-free 13th month and benefits ceiling applies to your payroll.

Step 1: Understand the Purpose of the TRAIN Law

The Tax Reform for Acceleration and Inclusion (TRAIN) Law, or Republic Act No. 10963, is part of the government's Comprehensive Tax Reform Program.

Simplifies and updates the tax system.
Aims to make taxation more fair and progressive.
Raises revenue to fund infrastructure and social services such as education, healthcare, and cash aid.

Step 2: Know the Updated Tax Rates and Exemptions

Income tax changes

Individuals with annual taxable income of up to ₱250,000 are exempt from income tax.
Lower income tax rates apply to most employees and self-employed individuals above that threshold.
Those in higher income brackets may still pay relatively higher marginal rates.

Tax-free benefits

13th month pay and other benefits are tax-free up to ₱90,000 (combined ceiling for qualifying benefits).
Excess over the ₱90,000 cap is taxable as part of compensation income.

Step 3: Gather Required Documents and Forms

Download the latest BIR forms appropriate to your situation (for example, BIR Form 1700 for purely compensation income).
Prepare your Taxpayer Identification Number (TIN) and personal information.
Keep copies of Withholding Tax Certificates (BIR 2316) from employers and other income documents.

Step 4: Compute Your Income Tax

Use the tax tables and computation rules under the TRAIN Law to determine your income tax due.

For purely compensation income, follow the step-by-step instructions provided on the latest BIR tax return form.
Make sure to consider exempt amounts and taxable benefits correctly.
Self-employed and professionals must consider their gross sales/receipts and allowable deductions or optional 8% income tax, as applicable.

Note: Always refer to the latest official BIR tax tables and guidance, as rates and brackets may be adjusted by law or regulations.

Step 5: File Your Income Tax Return (ITR)

Filing steps

Fill out the correct BIR tax return form completely and accurately.
Check all personal information, TIN, address, and tax computations.
Make sure to indicate the correct tax type, year, and return period.

Submission channels

Use the eBIRForms system or other BIR-approved electronic channels where required.
Submit returns electronically if mandated for your taxpayer type.
If manual filing is still allowed in limited cases, submit hard copies to the appropriate BIR office.

Step 6: Submit Supporting Documents and Payment

If paying manually, print copies of your ITR and the Tax Return Receipt Confirmation (TRRC) generated by eBIRForms.
Sign the returns and submit them with your payment at authorized agent banks or BIR Revenue Collection Officers, as applicable.
Keep official receipts, payment confirmations, and stamped copies of your returns for your records.

Step 7: Comply With Other TRAIN Law Requirements

For employers and businesses

Update payroll systems to reflect new withholding tax tables and exemptions.
Ensure correct withholding and remittance of taxes for employees.
Review contracts and pricing to account for any changes in tax burden on your business.

Other TRAIN Law components

Be aware of excise taxes on products such as petroleum and automobiles.
Consider how higher excise taxes may affect your operating costs (e.g., fuel, logistics).
Stay updated on later tax reform packages that build on TRAIN.

Practical Tips for Staying Compliant

Always use the latest BIR forms and tax tables when filing.
Keep organized records of income, expenses, and tax documents for at least several years.
Coordinate closely with your accountant or tax adviser, especially if your income sources are mixed or complex.
Monitor official BIR and DOF announcements for any updates or clarifications to the TRAIN Law.