What Is the BIR 8% Income Tax Rate? A Plain-English Guide for Freelancers

If you are a Filipino freelancer or a self-employed professional, you have probably seen the phrase "8% tax" thrown around in Facebook groups and never gotten a straight answer on what it means. This is that straight answer.

The 8% rate in one sentence

Instead of paying the graduated income tax (0%–35%) plus the 3% percentage tax, you pay a single flat 8% on your gross receipts above ₱250,000 for the year.

That is the whole idea. One rate, one computation, no deductions to track.

For the fuller walkthrough — who qualifies, the ₱3,000,000 ceiling, how the ₱250,000 exemption behaves across quarters, and how to elect the rate — see the 8% flat income tax rate explained for freelancers.

Who can use it

You can elect the 8% rate if all of these are true:

• Your gross annual receipts do not exceed the ₱3,000,000 VAT threshold.
• You are not VAT-registered.
• You are not a partner in a general professional partnership (GPP). The rule is about the partnership set-up, not your profession.
• You are not subject to a special percentage tax (for example amusement, franchise, common-carrier or overseas-communication tax). The ordinary 3% percentage tax is fine.
• You signalled your intent to use it — on your first quarterly return of the year, or when you registered.

Not registered with the BIR yet, or registered only as an employee? RaketTax Launchpad is a paid service where a partner bookkeeper registers you (or, if you have a TIN but no ORUS account yet, updates the registration under your existing TIN and moves it to your home RDO) and locks in the 8% election for you, fully digitally.

A quick example

Say you earned ₱900,000 in freelance income this year.

1. Subtract the ₱250,000 exemption: 900,000 - 250,000 = 650,000
2. Multiply by 8%: 650,000 x 0.08 = 52,000

Your income tax for the year is ₱52,000 — spread across your quarterly 1701Q filings and trued up on the annual 1701A.

The ₱250,000 exemption applies once per year, not per quarter. RaketTax tracks how much of it you have already used so your later quarters are correct.

Where RaketTax fits

RaketTax logs each payout, applies the exemption in the right quarter, and fills in your 1701Q and 1701A so the numbers match the BIR's own worksheet. From there, freelancers and small business owners can file it themselves through eBIRForms, or send it to the RaketTax VIP Concierge — you approve the return and a partner bookkeeper files it with the BIR for you.