Manila: House Speaker Faustino 'Bojie' Dy III and Majority Leader Ferdinand Alexander 'Sandro' Marcos have put forward a proposal aimed at raising the annual tax-free income ceiling to PHP350,000. The initiative is designed to offer significant tax relief to Filipino families, as expressed by the proponents.
According to Philippines News Agency, the two House leaders filed House Bill (HB) No. 10345 on Tuesday, following President Ferdinand R. Marcos Jr.'s announcement during his fifth State of the Nation Address (SONA). The president underscored the need to ease the tax burden on workers, an appeal that has now been translated into legislative action by the House.
Rep. Marcos articulated the essence of the proposal, noting that President Marcos's SONA highlighted the importance of providing tax relief directly in the paychecks of families. He emphasized that the proposed increase in the tax-free ceiling to PHP350,000 would allow workers to allocate more of their earnings towards essential expenses such as food, education, and healthcare.
The bill, if passed, would amend the current tax system by increasing the annual tax-free income threshold from PHP250,000 to PHP350,000. This change would enable a broader segment of Filipino workers to retain a larger portion of their earnings, in line with the restructuring of graduated income tax rates for Filipino citizens and resident aliens as proposed by Speaker Dy.
Under the existing Tax Reform for Acceleration and Inclusion (TRAIN) law, individuals earning up to PHP250,000 annually have been exempt from income tax since 2018. HB 10345 aims to revise this exemption threshold, bringing more workers under the zero-percent tax bracket for incomes not exceeding PHP350,000.
The proposal includes a 15-percent tax rate for annual taxable incomes above PHP350,000 but not exceeding PHP400,000. It maintains the current marginal tax rates for higher income brackets, ensuring continuity for taxpayers with incomes above PHP400,000.
The bill also stipulates that the separate income tax computation for married individuals will be retained, with joint income being equally divided. Moreover, minimum wage earners will continue to benefit from exemptions on various forms of pay, including holiday and overtime pay.
Qualified self-employed individuals and professionals can opt for an 8-percent tax on gross income above the proposed threshold, instead of the graduated income tax. Mixed-income earners will remain subject to the current tax structure according to their income sources.
Rep. Marcos reiterated the alignment of this legislative measure with the president's vision of responsible tax policy that adapts to the evolving cost of living. He highlighted the necessity of updating tax brackets to reflect current economic realities, benefiting workers, professionals, and small business owners alike.
The Department of Finance, in consultation with the Bureau of Internal Revenue, will be tasked with issuing implementing rules and regulations within 90 days of the law's enactment. The measure is set to take effect 15 days after its publication.
