Title II — TAX ON INCOME spouses, the same shall be divided equally between the spouses for the purpose of determining their respective taxable income. Provided, That minimum wage earners as defined in Section 22(HH) of this Code shall be exempt from the payment of income tax on their taxable income: Provided, further, That the holiday pay, overtime pay, night shift differential pay and hazard pay received by such minimum wage earners shall likewise be exempt from income tax. (b) Rate of Tax on Income of Purely Self-employed Individuals and/ or Professionals Whose Gross Sales or Gross Receipts and Other Non-operating Income Does Not Exceed the Value-added Tax (VAT) Threshold as Provided in Section 109(BB). — Self-employed individuals and/or professionals shall have the option to avail of an eight percent (8%) tax on gross sales or gross receipts and other non-operating income in excess of Two hundred fifty thousand pesos (P250,000) in lieu of the graduated income tax rates under Subsection (A)(2)(a) of this Section and the percentage tax under Section 116 of this Code.7 (c) Rate of Tax for Mixed Income Earners. — Taxpayers earning both compensation income and income from business or practice of profession shall be subject to the following taxes: (1) All Income from Compensation – The rates prescribed under Subsection (A)(2)(a) of this Section. (2) All Income from Business or Practice of Profession – (a) If Total Gross Sales and/or Gross Receipts and Other Non-operating Income Do Not Exceed the VAT Threshold as Provided in Section 109(BB) of this Code. — The rates prescribed under Subsection (A) (2)(a) of this Section on taxable income, or eight percent (8%) income tax based on gross sales or gross receipts and other non-operating income in lieu of the graduated income tax rates under Subsection (A) (2)(a) of this Section and the percentage tax under Section 116 of this Code. (b) If Total Gross Sales and/or Gross Receipts and Other Non-operating Income Exceeds the VAT Threshold as Provided in Section 109(BB) of this Code. — The 7 20 Introduced by Section 5 of the TRAIN Law. Isla Lipana & Co., the Philippine member firm of the PwC network