Higher take-home pay expected this January

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Metro Manila (CNN Philippines, January 5) — Workers can expect higher take-home pays starting this month, a financial analyst reminded the public.

Speaking to Newsroom Ngayon, FinancePH founder and accountant Mark Joseph Fernandez said the changes should reflect on the next cut-off.

"Effective po yung batas on January 1, 2018. So asahan po natin sa next cut-off natin, magrereflect na yung bagong changes na iyan," said Fernandez.

[Translation: The law takes effect on January 1, 2018. So we can expect that in our next cut-off, the changes will be reflected.]

Reflection of the tax change can vary from company to company. If salaries from previous months will be released in January, they are not expected to reflect the tax change yet. The reform only impacts earnings from January 1, 2018 onwards.

President Rodrigo Duterte signed the tax reform law on December. It promises lower income taxes for workers, but higher excise taxes on fuel and beverages. Critics of the law hit it for being anti-poor, and warned that the jack on fuel will affect transportation and the prices of basic commodities.

Related: Duterte signs tax reform bill, 2018 budget into law

Under the law, those earning P250,000 or less a year are exempt from income tax, while 13th month pay and bonuses up to P90,000 would also be tax-free.

Small businesses with total annual sales of P3 million and below are exempt from value added tax.

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Fernandez also projected additional take home pay for people with monthly salaries of P25,000 and P50,000.

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Fernandez computed the salaries by retrieving the expected annual income and computing the tax charge according to the tax schedule bracket it is under.

He advised workers to save their extra income, because they might end up paying more when they buy items or services — particularly those expected to be affected by the fuel and sugar-sweetened beverage tax hike.

"Pag sinave ko yung take home pay, lumalabas na mas nakakabenefit sa akin. Lumalaki yung tax ko doon sa mga binabayaran ko," Fernandez said.

[Translation: If I save my take home pay, I get more benefits. Tax gets higher when I pay for things.]