State of
Online
Taxation
20
25
How can the Online Digital Workforce Power Philippine Economic Growth?
It’s undeniable: Filipino freelancers and online micro-entrepreneurs have become a force to be reckoned with.
Current estimates put about 1.5 million Filipinos on global freelancing platforms (many more if counting local gigs) contributing significantly to income generation. By one measure, freelance earnings grew 208% between 2019 and 2020: the fastest growth of any Asian country.
This surge reflects how digital work became a crucial income source during the pandemic: in 2021, over 20% of the labor force (8.7 million people) reported using an online platform. These workers bolster the digital economy, which PSA reports was ₱2.25 trillion (8.5% of GDP) in 2024.
E‑commerce – an outlet for many online entrepreneurs – alone brought in ₱302 billion (13.5% of the digital economy) in 2024. In total, 11.3 million workers were employed in digital sectors last year, with e‑commerce accounting for roughly 77.9% of that employment.
E‑commerce – an outlet for many online entrepreneurs – alone brought in ₱302 billion (13.5% of the digital economy) in 2024. In total, 11.3 million workers were employed in digital sectors last year, with e‑commerce accounting for roughly 77.9% of that employment.
PIDS notes this leap was driven by the country’s large youth share and flexible work needs. Despite these promising developments, translating it to economic gains requires vigilance and incentives for this growing workforce.
Since we began in 2016, freelancers and small business owners have been the core of Taxumo’s user base. We believe that their capability to transform the Philippine economy hasn’t been fully realized yet.
This is why this year’s State of Online Taxation continues to be a story of their growth. By looking at the trend of their online tax payments from last year, we hope to see how their businesses are growing and what potential remains untapped.
A Growing Pressure from the BIR
The BIR set a 2024 revenue target of PHP 3.05 trillion and still managed to collect a staggering PHP 2.85 trillion in taxes, reflecting a 12.65% increase from the previous year.
The government has doubled down on illicit trade — including cigarettes, vapes, and other excisable goods that helped generate PhP110.33 million in revenue. President Marcos also cited BIR’s efforts against tax fraud, mainly through the Run After Fake Transactions (RAFT) program against ghost sellers.
The President said the bureau’s revenue last year could easily fund 1,140,800 new schools, 190,133 kilometers of roads, and 167,014 rural health facilities.
For 2025’s target collection, BIR has set the target of collecting PHP 3.2 Trillion for 2025.
To lift annual collections from ₱2.85T in 2024 to the ₱3.20T goal for 2025, BIR would need to average roughly at 0.97 % compound MoM growth throughout 2025 (this assumes that the year has a “smooth” monthly pattern).
How about Online Tax Payments?
On Taxumo, we’ve observed that income taxes filed online have exponentially grown since 2020, at 49.04% year on year.
The filing below includes both on-time filing (on or before April 11) and late filings (after April 11).
Figure 1: Year-on-year Growth Rate in Annual Income Tax Filed Online, 2020–2025
To note, this amount is not yet final, since we anticipate that more taxpayers will belatedly file their annual income tax.
Are Filipino Online Taxpayers Richer or Poorer?
Let’s take a look at the incomes declared by online taxpayers and determine their socioeconomic class based on these figures.
According to the Philippine Statistics Authority, the poverty threshold in 2023 for a family with five members at the national level was estimated at PhP 13,873 per month. This amount represents the minimum income required by a family to meet their basic food and non-food needs.
To arrive at the other categories, we used this definition from a paper from the Philippine Institute of Development Studies:
- Low income, but not poor: per capita incomes between the poverty line and twice the poverty line
- Lower middle income: per capita incomes between twice to four times the poverty line
- Middle middle income: per capita incomes between four times to ten times the poverty line
- Upper middle income: per capita incomes between ten to fifteen times the poverty line
- Upper income, but not rich: per capita incomes between fifteen to twenty times the poverty line
- Rich: per capita incomes at least equal to twenty times the poverty line
Figure 2: Socioeconomic Profile of Online Taxpayers, 2024 vs. 2025
Middle income earners, which include the lower middle (19.7%), middle (15.4%), and upper middle (12.4%) groups, make up about 47.5% of online taxpayers. This makes them the largest and most active segment in the digital tax space.
Those classified as poor still account for a significant 30.0%, only slightly lower than 30.8% in 2024. Many individuals in this category are still able to afford a paid digital platform for filing their taxes, suggesting they may not fully match the usual definition of poverty, which refers to people who cannot meet basic needs such as food, shelter, healthcare, or education. Their ability and willingness to pay for tax services points to a more complex financial situation than what their reported income might indicate.
At the higher end, people in the upper high income and rich categories saw small increases in participation, reflecting modest growth from wealthier users. Overall, the distribution across income groups has remained fairly steady, but most online tax activity continues to come from those in the middle and lower income levels.
How Old Are Our Online Taxpayers?
Let’s take a look into the age of online taxpayers, informing us which generation prefers to pay their taxes online.
Age groups or generations stated in this report are based on the Pew Research Centre definition.
Silent Generation
Born 1925–1945
0.04% of Online Taxpayers
Boomers
Born 1946–1964
0.98% of Online Taxpayers
Generation X
Born 1965–1980
10.05% of Online Taxpayers
Millennials
Born 1981–1996
66.81% of Online Taxpayers
Generation Z
Born 1997–2012
22.13% of Online Taxpayers
Figure 3: Annual Income Tax Filed Online (Count) by Generation, 2024 vs. 2025
In 2025, Millennials continued to make up the largest group of online taxpayers, accounting for 66.81% of all digital filers, although with a slight decrease from 71.23% in 2024. This shift likely reflects a broader change in the workforce, as more Gen Z individuals begin earning and filing taxes. Gen Z’s share rose from 17.94% to 22.13%, indicating their growing participation and ease with digital tax platforms.
Gen X remained relatively steady, with 10.05% in 2025 compared to 9.81% in the previous year. However, this group is expected to gradually decline as more individuals transition into retirement.
Both Millennials and Gen Z grew up in the digital age, making them naturally more inclined to use online tools for convenience and compliance. This is reflected in usage patterns on our application, where a significant majority of users come from these two generations. As they continue to make up a larger share of active users, we can expect digital tax filing to become even more common—driven by their comfort with technology and preference for seamless, online experiences.
How Much Does Generation Earn?
Understanding how income is distributed across generations helps us see who’s driving the economy, and who might need more support.
From early-career Gen Z professionals to peak-earning Millennials and Gen Xers, each generation contributes differently to the country’s tax base.
Figure 4: Annual Income Filed Online by Generation, 2024 vs. 2025
With Figure 4, we observe a year-on-year comparison (2024 vs 2025) of annual income tax remitted per generation, providing a clearer picture of how each age group contributes to the tax base.
Millennials remain the largest contributors, accounting for 73.50% of the total remitted annual income tax in 2025. This figure is nearly unchanged from 2024, indicating both stable income levels and consistent tax compliance from this generation.
Gen X saw a modest increase in their share, rising from 12.67% in 2024 to 12.90% in 2025. This shift may reflect either slightly higher income among Gen X filers or a small increase in the number of individuals actively filing and paying their annual income tax.
Interestingly, Gen Z’s contribution slightly declined despite more of them filing online. Their share of filers increased from 17.94% to 22.13%, yet their share of total remitted income tax dropped from 13.01% to 12.70%. This suggests that while more Gen Z individuals are entering the formal tax system, many are still early in their careers and earning within lower tax brackets.
Meanwhile, Boomers and the Silent Generation maintained a combined contribution of under 1%, with no notable change year over year. Their remittances likely stem from pensions, passive income, or late filings.
Figure 5: Income Sources Filed Online by Generation, 2024 vs. 2025
Figure 5 breaks down the sources of income reported by each generation, whether from business, profession, or mixed income, and shows how these have shifted from 2024 to 2025.
Millennials continue to lead in overall income contributions, especially in professional services and business. In 2025, they made up 30.77% of all professional income and 25.06% of business income. While their dominance remains, there was a slight dip in the business category compared to the previous year, suggesting a potential plateau or shift in entrepreneurial activity.
Gen Z, on the other hand, shows strong momentum. Their share of income from profession grew by 16%, business by 22%, and mixed income by an impressive 54%. This aligns with broader trends of younger earners entering the workforce, freelancing, or starting side hustles indicating a growing familiarity with multiple income streams.
Gen X remains relatively steady, with only slight increases across all categories. This stability reflects a more established generation whose income sources are likely settled and consistent year to year.
As expected, Boomers and the Silent Generation contribute very little across all income types, likely due to retirement or reliance on non-taxable income sources such as pensions.
Overall, the shifts observed in Figure 5 are subtle and reflect natural transitions as younger generations become more economically active. There are no major behavioral changes, only steady growth, especially among Gen Z.
Taxpayer Contributions and Cities
With over 127,000 users nationwide, Taxumo caters to taxpayers across various RDOs in the country. Here are the top 5 RDOs in Luzon, Visayas, and Mindanao that recorded the highest number of Taxpayers and the most remitted Annual Income Tax Revenue.
Figure 6: Interactive Geospatial Chart of Annual Income Tax Filed & Count by City, 2025
Luzon
Top Annual Income Taxpayers
- Taguig‑Pateros
- Novaliches (Quezon City)
- Marikina
- Pasig
- Parañaque
Visayas
Top Annual Income Taxpayers
- Mandaue City
- Cebu City North
- Talisay City, Cebu
- Cebu City South
- Iloilo City
Mindanao
Top Annual Income Taxpayers
- West Davao City
- Cagayan de Oro City
- Iligan City
- General Santos City
- East Davao City
These highlight the regions with the highest concentration of taxpayers, driven by business hubs, employment centers, and rising digital professionals across Luzon, Visayas, and Mindanao.
Tax Payments, by Industry
This ranking reflects the number of individuals or businesses filing taxes, not the total amount of tax paid.
Figure 7: Annual Income Tax Filed (Count) by Classification & Industry, 2025
Sectors like IT services, virtual assistance, online selling, and consulting have some of the highest numbers of taxpayers.
These industries are made up mostly of freelancers, small business owners, and self-employed professionals, many of whom are now entering the formal tax system.
Their individual incomes may be modest, but their growing numbers show increased compliance and awareness.
On the other hand, industries like manufacturing or large corporations may have fewer taxpayers, but they often pay a much larger share of total tax revenue, simply because of the scale of their operations and higher earnings.
Taxpayers by Gender & Generation
When you sign up for a Taxumo account, you will be asked to state the gender you identify as.
The choices are: Male, Female, Non-Binary, or N/A (for non-individual entities)
Your gender identity is not your gender assigned at birth (or biological sex).
Gender identity refers to how you personally understand and experience your gender—it’s not the same as your sex assigned at birth. It can reflect being male, female, both, neither, or somewhere in between. Only you can define your gender identity.
We value the diversity of our community. Everyone has unique needs and challenges, and knowing more about our users—such as their gender identity—helps us and others develop more inclusive, personalized solutions.
Online Taxpayers, Profiled by Gender
- 2021 marked a strong jump in tax filer growth for males (+128.57%) and females (+98.78%), possibly due to pandemic recovery.
- 2022–2023 showed a tapering off for male and female online taxpayers, while non-binary filer growth surged in 2023 (+166.67%).
- 2024 saw another spike in non-binary filer growth (+216.67%), but this should be read with caution, likely driven by small sample sizes.
- 2025 reflects a significant slowdown in growth across all gender groups, suggesting:
- The high-growth years (2021–2024) may have been driven by post-pandemic shifts.
- The current trend shows stabilization or saturation in taxpayer registration.
Figure 8: Year-on-Year Growth in Annual Income Tax Filed Online (Count) by Gender, 2020-2025
Revenue by Gender, based on the Annual Income Tax Filing Year-on-Year
2020–2024 was a period of rapid tax revenue growth across all genders, likely due to increasing formalization, digital tax tools, and post-pandemic income recovery.
In 2025, the growth slows across the board, indicating that the initial growth phase may be leveling off as the tax base stabilizes.
The non-binary group shows high growth rates, but due to likely small population size, this should be viewed as an early-stage compliance trend, not yet a stable indicator.
Figure 9: Year-on-Year Growth in Revenue from Annual Income Tax Filed Online by Gender, 2020–2025
Taxpayer Trends, by Gender & Generation
- Millennial females make up the largest share of the socioeconomic group at 40.03%, followed by Millennial males at 25.61%. This substantial lead reflects how Millennials—particularly women—are at the peak of their economic activity. Many are in their prime working years, actively engaged in employment, freelancing, or business. The higher share of female participation may also reflect the growing number of women entering the formal economy.
- Gen Z females (13.60%) outpace Gen Z males (7.86%) in socioeconomic participation. This gap suggests that young women are entering the workforce and formalizing their income earlier than their male counterparts. This may also reflect broader social trends where young women are more proactive in pursuing financial independence and compliance.
- Boomers and Silent Generation filers, across genders, contribute less than 1% each. This low share aligns with expectations: these older generations are either retired or have limited formal income, leading to less engagement in tax-filing activities. Their declining economic participation is consistent with lifecycle trends and reflects a natural shift toward younger earners forming the core of the active tax base.
- Non-binary individuals account for 0.43% of Gen Z and 0.47% of Millennials in the 2025 socioeconomic distribution. While these percentages may seem small, they mark a meaningful shift in representation. Younger generations are not only more open about diverse gender identities but are also more active in digital, freelance, and non-traditional work setups, sectors where tax filing is often self-managed. This likely contributes to the increasing visibility of non-binary individuals in formal socioeconomic data. Their consistent presence across both Gen Z and Millennial cohorts suggests that inclusion is improving, especially as systems become more gender-sensitive.
Note: The “N/A” gender entries and generation-unknown cases are minimal and unlikely to skew the data. With Gen Z “N/A” at 0.23% and untagged Gen X/Millennials at 0.27% and 0.70%, these represent individuals who did not disclose or were not captured in demographic tagging during tax filing.
Figure 10: Annual Income Tax Filed Online (Count) by Gender (Male, Female, Non-binary, and N/A for non-individuals) and Generation, 2025
Our Final Thoughts for 2025’s State of Online Taxation Report
The growth of the online digital workforce in the Philippines is not just a trend, it’s a structural shift in how Filipinos earn, contribute, and participate in the formal economy. From freelancers and online sellers to remote professionals, millions are embracing digital platforms as viable sources of income. This movement has created new opportunities for inclusion, especially among Millennials and Gen Z, who continue to show rising contributions in both professional and business income.
While the surge in online taxpayer registration and gender diversity points to increased awareness and compliance, 2025 may be signaling a stabilization in growth. This makes it an ideal moment for policymakers, platforms, and the BIR to focus on deeper support: improving systems, reducing friction in compliance, and unlocking the untapped economic potential of this sector.
As the BIR aims to hit its PHP 3.2 trillion revenue target, understanding the digital workforce’s role becomes essential. Taxumo’s data shows that while many of these taxpayers may contribute modest amounts individually, their collective participation strengthens the foundation of a more inclusive and digital-first tax ecosystem. Moving forward, fostering this community’s growth and success could be key to sustainable, tech-driven economic progress in the Philippines.
About Taxumo
Taxumo is the country’s pioneer tax compliance platform accredited by the Bureau of Internal Revenue (BIR). Since 2016, users signed on our platform have remitted over PHP 52 million pesos to the BIR. We continue to serve the Philippine tax paying community through our seamless platform, customer-first support, and resources to make tax compliance a breeze.