BIR Donor's Tax Cumulative Calculator

Donor's tax surprises people because they assume gifts between family are free. They are not, beyond a point. Whenever you transfer property or money to someone for nothing in return while you are still alive, the BIR treats it as a donation, and once your giving crosses a yearly threshold, tax applies. The good news is that the TRAIN Law (RA 10963) replaced the old messy schedule (which once charged up to 15%, and far more for strangers) with a single flat rate, so the math is now genuinely simple.

How the flat 6% actually works

Under TRAIN, donor's tax is a flat 6% on total gifts made during the calendar year, computed on the amount exceeding ₱250,000. That ₱250,000 exemption is annual and cumulative, not per gift. This is the part people miss. If you give your son ₱200,000 in March and another ₱200,000 in November, you do not get two separate exemptions. The BIR adds your gifts across the whole year, so you donated ₱400,000, the first ₱250,000 is exempt, and the remaining ₱150,000 is taxed at 6%, which is ₱9,000.

The old law also charged a punishing higher rate when the recipient was a stranger rather than a relative. TRAIN scrapped that distinction. A gift to a friend, a godchild, or a complete stranger now carries the same flat 6% as a gift to your own child, which dramatically simplified planning for anyone who is generous outside their bloodline.

A return is technically due within thirty days of each donation, even though the exemption is reckoned annually, so the paperwork can pile up if you give often.

The transfers people forget are donations

The edge case worth real attention is the sale that is not really a sale. If you sell property to a relative for far less than its fair market value, the BIR can treat the discount as a donation. Sell a lot worth ₱3,000,000 to your daughter for ₱1,000,000 and that ₱2,000,000 gap looks a lot like a gift; the difference, less the ₱250,000 exemption, can be assessed donor's tax. There is a carve-out for genuine arm's-length sales made in the ordinary course of business, but a sweetheart deal inside the family rarely qualifies.

The other common trap is parents quietly funding a child's condo or putting a property in the child's name to sidestep future estate tax. That transfer during your lifetime is a donation today, and it gets compared against your annual exemption. Sometimes paying donor's tax now is still cheaper than estate tax later, and sometimes it is not. It is worth modeling both before you sign anything, because the two taxes share the same 6% rate but very different exemptions.

Are donations to charity exempt?

Gifts to accredited non-stock, non-profit institutions, and to the government, are exempt from donor's tax, provided not more than 30% of the donation goes to administration expenses. The accreditation matters; a casual gift to an unaccredited group does not automatically qualify, so confirm the recipient's status before assuming the exemption.

Do donations between spouses count?

Donations between husband and wife during the marriage are generally void under the law (with small exceptions for moderate gifts on family occasions), so they are not the usual donor's tax planning route. Gifts to your children, however, are fully within scope and counted against your annual ₱250,000.

Who files and pays, the giver or the receiver?

The donor pays. Donor's tax is a tax on the act of giving, filed by the person making the gift, not the one receiving it. The recipient's only concern is later being able to prove the property was properly transferred.

You can run any gift through the donor's tax calculator to see the taxable portion after the annual exemption. The flat 6% and the ₱250,000 relief both come from TRAIN; the current forms are on bir.gov.ph. If I have a figure wrong, that is mine to fix, and you can tell me on the about page.

• Donor's Tax Calculator
• Estate Tax Calculator
• Zonal Value Calculator