1.2M workers to enjoy addt'l P15K take-home pay from raising of tax-exempt ceiling to P350K — DOF

Over a million more workers could expect heftier take-home pay once President Ferdinand “Bongbong” Marcos Jr.’s proposal to raise the personal income tax exemption threshold is legislated, Finance Secretary Frederick Go said Wednesday.

In his fifth State of the Nation Address (SONA 2026), Marcos called on lawmakers to expand the exemption ceiling for personal income tax to those earning P350,000 yearly from the current P250,000.

“I'd like to say that the Department of Finance fully supports all the reforms and measures mentioned by President Bongbong Marcos… This is a timely and meaningful tax reform that puts more money in the pockets of millions of Filipinos,” Go said at a press conference in Manila.

The Finance chief said the DOF estimates that an additional 1.2 million workers, earning between P250,000 and P350,000 annually, who would no longer pay personal income tax, will enjoy up to P15,000 in additional yearly take-home pay.

Currently, the Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law exempts those earning P250,000 a year from paying income tax.

Go said there are about 5.1 million workers who are currently tax-exempt.

Once the ceiling was raised, the number of tax-exempt workers would go up to 6.3 million, according to the Finance chief.

“By raising the [annual] income tax exemption threshold from P250,000 to P350,000, you might think that it's only those within the P250,000 to P350,000 [bracket] who will benefit from the exemption,” Go said,

“But actually everybody above P350,000 as well will also benefit,” he added.

This is the tax rates under TRAIN law that would also adjust once the tax-exempt threshold is raised.

Below is income tax table rates under TRAIN law:

• Not more than P250,000 - 0%
• More than P250,000 but not above P400,000 - 15% of the excess over P250,000
• Over P400,000 but not more than P800,000 - P22,500 plus 20% of the excess over P400,000
• More than P800,000 but not over P2 million - P102,500 plus 25% of the excess over P800,000
• Over P2 million but not more than P8 million - P402,500 plus 30% of the excess over P2 million
• More than P8 million - P2.2 million plus 35% of the excess over P8 million

“Workers earning P350,000 and above can receive up to a maximum of P17,500 more in income tax relief that will translate to up to P17,500 more in annual take-home pay. So this means, of course, that there will be a bigger share of hard-earned income that can go towards everyday needs,” Go said.

Projected revenue loss: P60 billion

The Finance chief said the DOF is expecting “as much as P60 billion pesos” in foregone revenues from the proposed expansion of the income tax exemption ceiling.

To offset the expected revenue losses, Go said that “I think the most obvious sources of revenue are what we call excise taxes.”

The Cabinet official did not elaborate but hinted that items charges with excise taxes such as tobacco, sugar-sweetened beverages, could be charged higher.

“All you have to do is look at the categories that are taxed with excise taxes and you'll sort of figure out. They should be the same, normally they would be the same industries that would have to be covered,” Go said. — RSJ, GMA News