TOM is employed by ABC Corporation. He received the SMW (Statutory Minimum Wage) for 2023 in the total amount of P100,000 and 13th month pay and other bonuses amounting to P75,000. In the same year, he also received overtime pay of P40,000 and nightshift differential of P25,000. He also received commission income from the same employer of P20,000, thus, total income received amounted to P260,000. How much is the Income Tax due?

To calculate the income tax due for TOM in 2023, we need to break down the components of his income and determine what is taxable and what is exempt, following the relevant tax rules.

### Step 1: Determine exempt and taxable incomes

- **Statutory Minimum Wage (SMW):** Exempt from income tax.
  - Exempt amount = **P100,000**

- **13th Month Pay and Other Bonuses:** Exempt up to a limit. For 2023, the exemption cap is **P90,000**. Since TOM's bonuses and 13th month pay total **P75,000**, the entire amount is exempt.
  - Exempt amount = **P75,000**

- **Overtime Pay and Nightshift Differential:** Since TOM is a minimum wage earner (receiving SMW), overtime pay and nightshift differential are also exempt from tax.
  - Exempt amount for overtime pay = **P40,000**
  - Exempt amount for nightshift differential = **P25,000**

- **Commission Income:** Commissions are generally taxable, even if received by a minimum wage earner.
  - Taxable income = **P20,000**

### Step 2: Total Exempt and Taxable Income

- **Exempt Income** = P100,000 (SMW) + P75,000 (13th month pay and bonuses) + P40,000 (overtime pay) + P25,000 (nightshift differential) = **P240,000**
  
- **Taxable Income** = **P20,000** (commission)

### Step 3: Calculate Income Tax on Taxable Income

For taxable income up to P250,000, no income tax is due under the current Philippine tax brackets.

Since TOM's taxable income is **P20,000**, which is below the **P250,000** threshold, no income tax is due.

### Conclusion: 
The total income tax due for TOM in 2023 is **P0**.

Would you like more details on this, or do you have any further questions?

Here are 5 related questions:
1. How would the tax calculation change if TOM earned more than P250,000 in taxable income?
2. What are the tax implications if TOM received non-statutory bonuses above P90,000?
3. How does overtime pay exemption work for non-minimum wage earners?
4. What is the difference between taxable and non-taxable fringe benefits?
5. How is commission income taxed in the Philippines?

**Tip:** Always check for the latest tax laws and exemptions, as they can vary year to year.

Learn how to calculate the income tax for a minimum wage earner in the Philippines in 2023. This guide breaks down the exempt and taxable income components, including statutory minimum wage, bonuses, overtime pay, nightshift differentials, and commission income. Find out why no income tax is due for total earnings of P260,000.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation