It’s that time of the year when we are again required to pay taxes and file our income tax returns. Some, however, are exempt from paying income tax. Minimum wage earners are not required to pay income taxes. Here’s a primer of the new law.
What is Republic Act No. 9504?
This law, which was approved on 17 June 2008 (full text), exempts minimum wage earners from paying income tax. It amends certain provisions of the the National Internal Revenue Code Of 1997.
Who are covered by the exemption?
Employees in the public and private sectors who are receive minimum salary/wage are covered by the exemption.
Who are considered as statutory minimum wage earners?
The term statutory minimum wage earner shall refer to a worker in the private sector paid the statutory minimum wage, or to an employee in the public sector with compensation income of not more than the statutory minimum wage in the non-agricultural sector where he/she is assigned.
What is the minimum wage in the National Capital Region (NCR)?
The new daily minimum wage of covered workers in the private sector in the National Capital Region (NCR), per Wage Order No. 14, is:
- P382 – Non-Agriculture
- P345 – Agriculture (Plantation and Non Plantation)
- P345 – Private Hospitals with bed capacity of 100 or less
- P345 – Retail/Service establishments employing 15 workers or less
- P345 – Manufacturing establishments regularly employing less than 10 workers
The minimum wage for other areas are covered by the pertinent wage orders of the Regional Tripartite Wage and Productivity Board (RTWPB).
What are the allowed personal exemptions for individual taxpayer?
Regardless of status (i.e., whether single or married), a taxpayer shall be entitled to the following exemptions:
P50,000 – basic personal exemption for each individual taxpayer
P25,000 – additional exemption for each dependent, not exceeding 4
A dependent means a legitimate, illegitimate or legally adopted child chiefly dependent upon and living with the taxpayer if such dependent is not more than 21 years of age, unmarried and not gainfully employed or if such dependent, regardless of age, is incapable of self-support because of mental or physical defect.
In other words, the maximum total exemption for a family of 6 (2 working spouses and 4 dependent children) is P200,000.
Are companies or employers required to withhold taxes from salaries/wages of covered employees?
No. Employers of minimum wage earners are not required to deduct and withhold taxes for wages/salaries of persons covered by the exemption.
Minimum wage earners are exempt from the payment of income tax on their taxable income. They are not covered by the rules regarding the withholding of taxes. They are also exempt from filing an income tax return.
Holiday pay, overtime pay, night shift differential pay and hazard pay received by minimum wage earners shall also be exempt from income tax.
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Good Morning, Question : if an employee receives a salary raise, what to do from minimum wage earner to taxable wage earner?
Hi,
Question about de minimis. When de minimis approved last 2015, automatic na ba ang employer ang mag apply ng de minimis to all minimum wage earner or selected emplyoyee lang ang bibigyan?
Hello po. Ano po ba ang proof of income na pwedeng ipresent sa scholarship para makita na minimum wage earner yung parents ko po? Wala po kasi silang ITR. Thank you po.
Sir/mam… Hingi lang po aq advice… Im working here in mindanao po… With a minimum of 340 wages… Tanong q po if ever madagdag sa amin ung increase. Magiging taxable n po kmi… 10pesos lang po dahilan na mg deduct kmi ng tax… Ano ba advantage and disadvantage sa taxable or non-taxable… May makukuha ba kmi binipisyo pgdating sa time na ma stop kmi sa work…. Madadagdagan ba length of sevice pay nmin..? I nid answer po di po kasi aq kabisado…
good afternoon po…will you please elaborate the RA9504..nakakalito na kasi…based on the tax table ito ang ang bracket na subject to withholding tax compensation tapos sa RA9504 tax exempt ang MWE.
Here’s the scenario:
Minimum Wage Rate= 318
Basic Pay: 8268 (318*26)
OT Pay: 3875.63
Gross Compensation Income: 12,143.63
Can I avail the said tax exemption?
Good day po! What if an employee received minimum wage from January to August,then received a salary increase on September,2017? Will his September to December,2017 income subject to tax?