Introduction

In the Philippine tax system, withholding tax on compensation serves as a mechanism for the government to collect income taxes at the source, ensuring efficient revenue generation while minimizing tax evasion. For married male employees with children, this process involves the deduction of taxes from their salaries or wages by their employers before the net pay is disbursed. This article provides a comprehensive overview of the relevant laws, procedures, computations, and considerations under the National Internal Revenue Code (NIRC) of 1997, as amended by key legislation such as the Tax Reform for Acceleration and Inclusion (TRAIN) Law (Republic Act No. 10963) and the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law (Republic Act No. 11534). It covers the historical evolution, current framework, and practical implications, emphasizing that under the prevailing regime, marital status and the number of dependent children do not directly alter the withholding tax calculation due to the repeal of personal and additional exemptions.

Legal Basis and Historical Evolution

The foundation for withholding tax on compensation is found in Section 79 of the NIRC, which mandates employers to withhold taxes on taxable compensation income paid to employees. This system originated from earlier tax codes but was significantly reformed over time to adapt to economic needs.

Prior to the TRAIN Law's implementation on January 1, 2018, the withholding tax regime differentiated based on an employee's civil status and dependents. Under the old system (Revenue Regulations No. 2-98, as amended), employees enjoyed a basic personal exemption of PHP 50,000 per individual, with married individuals treated as having separate exemptions for each spouse if both were employed. Additionally, qualified dependent children (up to four) entitled the taxpayer to an additional exemption of PHP 25,000 per child. For a married male employee, this meant potentially higher exemptions if he was the primary earner or if his spouse was not working, reducing the taxable base and, consequently, the withheld tax. The head of family status could also apply to unmarried individuals with dependents, but married employees typically claimed under the married category.

The TRAIN Law revolutionized this by repealing personal and additional exemptions under Section 35 of the NIRC. This simplification aimed to broaden the tax base and make the system more equitable. In lieu of exemptions, the law introduced a tax-exempt threshold of PHP 250,000 on annual taxable income for all individuals, regardless of status. The CREATE Law further refined the graduated income tax rates effective January 1, 2023, lowering rates in certain brackets to alleviate the burden on middle-income earners. As of 2026, no subsequent major amendments have reinstated dependent-based exemptions for compensation income withholding, rendering the system uniform for all employees, including married males with children.

Other relevant laws include Revenue Regulations (RR) No. 8-2018, which implemented the TRAIN Law's withholding provisions, and RR No. 16-2021 for CREATE adjustments. The Bureau of Internal Revenue (BIR) administers these through forms, tables, and guidelines, ensuring compliance.

Scope and Applicability

Withholding tax applies to all compensation for services rendered in an employer-employee relationship, including salaries, wages, bonuses, and other emoluments. Married male employees with children fall under this as resident citizens or aliens engaged in trade or business, unless exempted (e.g., minimum wage earners in the private sector, who are fully tax-exempt under Section 3 of RR No. 11-2018).

Exemptions from withholding include:

Compensation of minimum wage earners (currently PHP 610 per day in the National Capital Region, varying by region).
Holiday pay, overtime pay, night shift differential, and hazard pay for minimum wage earners.
Certain non-taxable benefits, such as 13th-month pay and other benefits up to PHP 90,000 annually (Section 32(B)(7)(e) of the NIRC).
De minimis benefits, including monetized unused vacation leaves (up to 10 days), medical cash allowances (up to PHP 1,500 per semester), rice subsidies (up to PHP 2,000 monthly), uniforms (up to PHP 6,000 annually), and others capped at specified amounts.

For married male employees with children, these exemptions provide indirect relief, as family-related expenses might be offset through de minimis benefits like employee achievement awards or gifts, but no direct tax adjustment for dependents exists.

Computation of Withholding Tax

The computation of withholding tax on compensation is standardized and does not factor in marital status or dependents. Employers use the revised withholding tax tables issued by the BIR, which account for the PHP 250,000 annual tax-exempt threshold and graduated rates. The process involves:

Determine Gross Compensation: Sum all taxable earnings for the period (e.g., monthly salary, allowances not classified as de minimis).
Deduct Non-Taxable Items and Mandatory Contributions:
- Non-taxable compensation (e.g., 13th-month pay up to PHP 90,000, de minimis benefits).
- Mandatory deductions: Social Security System (SSS) contributions (employee share up to 4.5% of monthly salary credit, capped at PHP 30,000 salary credit), PhilHealth contributions (2.75% of monthly basic salary, shared equally, capped at PHP 100,000 salary), Pag-IBIG Fund contributions (up to 2% of monthly compensation, capped at PHP 5,000), and union dues where applicable.
- These deductions reduce the taxable base. For a married male with children, SSS and PhilHealth contributions may indirectly benefit the family, as dependents (spouse and children under 21) are covered without additional premiums, but this does not affect the tax withholding formula.
Apply the Cumulative or Annualized Method:
- For regular payroll, employers use the cumulative average method: Track year-to-date gross taxable compensation, project annual income, apply the annual tax due (using graduated rates), then compute the withholding for the current period.
- Alternatively, for year-end adjustments, annualize the income to ensure accurate tax.

The current graduated income tax rates (post-CREATE, effective 2023) are as follows:

Annual Taxable Income (PHP)	Tax Rate
0 - 250,000	0%
250,001 - 400,000	15% of excess over 250,000
400,001 - 800,000	22,500 + 20% of excess over 400,000
800,001 - 2,000,000	102,500 + 25% of excess over 800,000
2,000,001 - 8,000,000	402,500 + 30% of excess over 2,000,000
Over 8,000,000	2,202,500 + 35% of excess over 8,000,000

For periodic withholding (e.g., monthly), the BIR provides specific tables. For instance, the monthly table for compensation over PHP 20,833 (equivalent to annualized 250,000) starts with brackets and corresponding taxes plus percentages on excess.

Example Computation: Consider a married male employee with two children earning PHP 50,000 monthly (PHP 600,000 annually). Assume mandatory deductions total PHP 3,000 monthly (SSS PHP 1,350, PhilHealth PHP 1,375, Pag-IBIG PHP 100, for a salary credit in that range).

Monthly taxable compensation: PHP 50,000 - PHP 3,000 = PHP 47,000.
Annual projection: PHP 564,000 taxable.
Tax due: First 250,000 at 0%; next 150,000 (250,001-400,000) at 15% = PHP 22,500; next 164,000 (400,001-564,000) at 20% = PHP 32,800. Total annual tax: PHP 55,300.
Monthly withholding: Approximately PHP 4,608 (annual tax divided by 12), adjusted cumulatively.

In this scenario, the employee's family status does not reduce the tax, unlike pre-TRAIN where exemptions could lower it by PHP 100,000+ (personal + two dependents).

Employee and Employer Obligations

Employees must:

Submit BIR Form 2305 (Certificate of Update of Exemption and of Employer's and Employee's Information) upon employment or status change (e.g., marriage, birth of child). Although exemptions are repealed, this form updates records for potential future benefits or audits.
File an annual income tax return (BIR Form 1700 or 1701) by April 15, declaring all income and claiming any overwithheld tax as refund.
For married couples, each spouse files separately; compensation income cannot be combined.

Employers must:

Register with the BIR using Form 1901 or 1903.
Withhold and remit taxes monthly via BIR Form 1601-C, due by the 10th-15th of the following month.
Issue BIR Form 2316 (Certificate of Compensation Payment/Tax Withheld) to employees by January 31.
Conduct year-end adjustments to reconcile withheld taxes with actual liability.

For married male employees with children, employers may provide family-oriented benefits like health insurance premiums (tax-deductible up to PHP 2,400 annually per family), but these are optional and do not alter withholding.

Special Considerations and Relief Measures

Although direct tax relief for dependents is absent, related provisions include:

Solo Parent Exception: Under RA 8972 (Solo Parents' Welfare Act), as amended, solo parents (not applicable to married individuals) receive a 10% discount on certain goods, but no tax exemption post-TRAIN.
Senior Citizen or PWD Dependents: If children qualify as persons with disabilities, additional medical deductions may be claimed in itemized returns, but not for withholding.
Optional Standard Deduction (OSD): Employees opting for OSD (40% of gross income) in their returns can reduce taxable income, but this is post-withholding.
Tax Credits: Foreign tax credits or other credits apply if relevant, but not for family status.
Expanded Maternity/Paternity Benefits: Under RA 11210 (105-Day Expanded Maternity Leave Law) and RA 8187 (Paternity Leave Act), leaves are paid but subject to withholding if considered compensation.

In cases of multiple employers, the primary employer withholds based on full rates, while subsequent ones apply a flat 15% or graduated rates without the 250,000 exemption.

Penalties for Non-Compliance

Failure to withhold or remit taxes incurs penalties under Section 251-255 of the NIRC:

25% surcharge for late filing/remittance, plus 12% annual interest.
Criminal penalties for willful neglect, including fines (PHP 5,000-50,000) or imprisonment (1-10 years).
For employees, underdeclaration may lead to 50% surcharge if substantial (over 30% of actual).

Conclusion

The withholding tax system in the Philippines has evolved from a dependent-sensitive framework to a simplified, uniform structure that prioritizes ease of administration over individualized exemptions. For married male employees with children, this means no preferential treatment in tax calculations, though indirect benefits through social contributions and non-taxable perks provide some family support. Employees are encouraged to stay informed via BIR issuances and consult registered tax agents for personalized advice, ensuring compliance in an ever-adapting fiscal landscape.