How to Use the Withholding Tax Table (Effective January 1, 2009)

The Withholding Tax Table in Sprout Payroll can be found under the Company tab on the Navigation toolbar. Select Tax Table from the drop-down list that appears.

Tax tables serve as matrices in providing information concerning the taxes due to be paid by the employee for every available salary bracket. There are 4 available withholding tax tables depending on the set number of pay periods ━ Daily, Weekly, Semi-Monthly, and Monthly. The tax tables consist of the following: 

• Tax Status

• Compensation Level

• Base Tax

• Percentage in Excess of the Compensation Level

Below are the steps on how to use the withholding tax table:

1. First, you should ask what the tax status of the employee is. This can be checked in the employee profile.

 

2. Next, Determine the taxable income.

General Formula:

Taxable Income = Taxable Earnings - Nontaxable Deductions

Below is the composition of Taxable Earnings and Nontaxable Deductions, respectively:

Net Taxable Earnings = Basic Pay + Overtime Pay + Night Differential - Late and Undertime - Absences + Rest Day and Holiday Pay + Taxable Allowances

Nontaxable Deductions = SSS contribution + PhilHealth contribution + Pag-IBIG contribution

3. Using the correct tax table, deduce the compensation level, base tax and percentage in excess of the compensation level based on the tax status and computed taxable income. Note that compensation level should be the highest amount which does not exceed the taxable income.

 

4. Compute withholding tax:

Formula:

Withholding Tax = [(Taxable Income - Compensation Level) * Percentage in Excess of Compensation Level] + Base Tax

Let’s calculate the withholding tax for the given example below by following the steps:

 

Periods per Month	2 (Semi-Monthly)
Tax Status	ME1
Basic Pay	7,500.00
Overtime Pay	1,077.59
SSS contribution	272.50
PhilHealth contribution	93.75
Pag-IBIG contribution	50.00

1. Determine the employee's tax status.

• ME1 (Married Employee with 1 dependent)

2. Determine the taxable income.

Net Taxable Earnings
Basic Pay	7,500.00
Overtime Pay	1,077.59	8,577.59
Nontaxable Deductions
SSS contribution	(272.50)
PhilHealth contribution	(93.75)
Pag-IBIG contribution	(50.00)	(416.25)
Taxable Income		8,161.34

 

3. Determine the compensation level, base tax and percentage in excess of the compensation level by looking at the range of values provided.

 

• Compensation Level = 6,042.00

• Base Tax = 354.17

• Percentage = 20%

4. Compute withholding tax.

Taxable Income	8,161.34
Compensation Level	(6,042.00)
Excess of Taxable Income over Compensation Level	2,119.34
Multiply by: Percentage	20%
Tax on Excess of Taxable Income over Compensation Level	423.87
Add: Base Tax	354.17
Total Withholding Tax	778.04