Philippine taxes for Americans: Philippine-source income, the 1976 treaty and your US return

The short answer: as an American living in the Philippines, you're generally taxed by the Philippines only on income from Philippine sources, whether or not you count as a resident. Uncle Sam, meanwhile, taxes your worldwide income every year, wherever you live.

The short version

• Aliens pay on Philippine-source income only. Resident and non-resident aliens alike are taxed only on income from sources within the Philippines; only resident Filipino citizens are taxed on worldwide income [1].
• Your category sets the rates. Resident aliens and non-resident aliens engaged in trade or business pay graduated rates from 0% to 35% [1]. Non-resident aliens not engaged in trade or business generally pay 25% on Philippine income [1].
• The 180-day line: a non-resident alien who spends more than 180 days in a calendar year is treated as engaged in trade or business [2].
• Treaty yes, totalization no. The US and the Philippines have a 1976 income tax treaty [5], but no Social Security totalization agreement [7].
• The US side: you file Form 1040 every year, plus an FBAR if your foreign accounts top USD 10,000 [8]. The foreign earned income exclusion or the foreign tax credit usually prevents paying twice.

This is general information, not tax advice. USD conversions use the European Central Bank cross rate of October 30, 2026 (USD 1 = PHP 63.68), rounded.

Which kind of taxpayer are you?

Philippine tax law sorts foreigners ("aliens") into three groups. The PwC summary of the rules puts it this way [2]:

The headline for most Americans: US Social Security, a US pension, your 401(k) and income from a US employer or US clients aren't Philippine-source income, so the Philippines generally doesn't tax them. That's a big difference from countries that tax residents on everything. Where your work is physically performed can matter for some kinds of income, though, so a remote worker should get advice before assuming their paycheck is foreign-source.

SRRV holders also get an exemption from tax on pensions and annuities, according to the Philippine Retirement Authority [6].

How the Philippines taxes your income

If you earn Philippine-source compensation or business income as a resident alien or a non-resident alien engaged in business, these graduated rates apply, effective from January 1, 2023 [1]:

A few other things that work differently from back home:

• Passive income like Philippine bank interest is usually hit with a final tax withheld at source, at up to 20% for resident aliens and those engaged in business [1]. You don't file anything extra for it.
• Freelancers and small businesses under the VAT threshold of PHP 3 million (about USD 47,110) can choose an 8% tax on gross receipts above PHP 250,000 instead of the graduated rates [1].
• Fringe benefits like employer-paid housing for managers are taxed to the employer at a special rate [1]. Expect your housing allowance to come up in contract talks.
• Foreign tax credits run one way. Aliens can't claim a Philippine credit for foreign taxes on foreign-source income [3], which makes sense, since that income isn't taxed here anyway.

Filing and deadlines

The Philippine tax year is the calendar year, and annual returns are due by April 15 of the following year [4]. If you have one Philippine employer, only salary income and the right amount withheld, you may qualify for substituted filing: your employer's BIR Form 2316 stands in for your return [4]. Non-resident aliens engaged in trade or business can't use substituted filing [4]. If you owe more than PHP 2,000 at filing time, you can pay in two installments, on April 15 and October 15 [4].

You'll deal with the Bureau of Internal Revenue (BIR) and need a Taxpayer Identification Number (TIN) for most of this, and for many bank and property transactions too.

The US side: you still file every year

The US taxes its citizens on worldwide income no matter where they live. Moving to Manila doesn't change that. The main tools to avoid double tax:

• Foreign earned income exclusion (FEIE), Form 2555: excludes up to USD 130,000 of foreign earned income for tax year 2025 and USD 132,900 for 2026 [9]. It covers wages and self-employment income, not pensions, Social Security or investment income.
• Foreign tax credit (FTC), Form 1116: a dollar-for-dollar credit for income tax you pay to the Philippines on income the US also taxes. It often works better when you pay meaningful Philippine tax on a Philippine salary.
• FBAR (FinCEN Form 114): required if your foreign accounts together topped USD 10,000 at any time in the year. It's due April 15 with an automatic extension to October 15 [8].

Here's a common pattern. If you're a retiree living on Social Security and a US pension, you may owe the Philippines nothing and simply file your US return as if you lived in the States, plus the FBAR. If you work for a Philippine company, you'll pay Philippine tax on your salary and then use the FEIE or FTC on your US return. See FEIE vs the foreign tax credit.

The US–Philippines tax treaty

The two countries signed an income tax treaty in 1976, and the IRS publishes it with a technical explanation [5]. The Philippines also lists the US among its tax treaty partners [3]. What it means for you:

• Treaty articles cover things like business profits, dividends, interest, royalties, pensions and income from personal services. How they apply depends on the type of income, so we don't summarize them line by line here.
• The saving clause lets the US tax its citizens as if the treaty didn't exist, with some exceptions. In practice, the treaty helps more on the Philippine side.
• It's old. A 1976 treaty predates many modern rules, so don't assume it matches newer US treaties you may have read about.

No totalization agreement

The US has Social Security agreements with 31 countries, and the Philippines isn't one of them [7]. That has two consequences:

• If you work for a Philippine employer, you'll pay into Philippine social insurance, and a US employer that sends you over may still owe US Social Security too. Your Philippine contributions don't count toward US benefits.
• If you're self-employed with US clients, you generally still owe US self-employment tax, even with the FEIE. See self-employment tax abroad.

The good news for retirees: US Social Security payments can generally be sent to the Philippines. See Social Security abroad.

A simple order of operations

1. Count your days in the Philippines each year. Over 180 changes your non-resident category [2].
2. Sort your income into Philippine-source and foreign-source. That decides what the BIR sees.
3. Get a TIN if you'll earn Philippine income, open accounts or buy property.
4. File your Philippine return by April 15 if you're required to, or confirm substituted filing with your employer [4].
5. File your US return with the FEIE or FTC, and the FBAR [8][9].

For a sanity check from people who've been through it, ask in our community group for Americans in the Philippines. For your own numbers, a US expat tax preparer (or a Philippine tax lawyer) can check your situation.

Sources

1. PwC Worldwide Tax Summaries: Philippines, taxes on personal income (reviewed July 2, 2026)
2. PwC Worldwide Tax Summaries: Philippines, residence (reviewed July 2, 2026)
3. PwC Worldwide Tax Summaries: Philippines, foreign tax relief and tax treaties (reviewed July 2, 2026)
4. PwC Worldwide Tax Summaries: Philippines, tax administration (reviewed July 2, 2026)
5. IRS: Philippines tax treaty documents
6. Philippine Retirement Authority: Special Resident Retiree's Visa
7. SSA: US international Social Security agreements
8. IRS: Report of Foreign Bank and Financial Accounts (FBAR)
9. IRS: Figuring the foreign earned income exclusion

Keep reading

• Banking in the Philippines as an American
• The SRRV retirement visa in the Philippines
• FEIE vs the foreign tax credit
• Tax treaties and totalization agreements