Marcos pushes for higher tax-exempt income, wealth tax by end of 2026

President Ferdinand Marcos Jr. prefers that Congress pass this year the proposed tax reform measure seen to bring tax relief to those earning P350,000 and below annually, while collecting higher excise taxes and a wealth tax on luxury vehicles, Malacañang said on Tuesday.

At a Palace press briefing, Palace Press Officer Undersecretary Claire Castro said the Department of Finance (DOF) continues to refine the Promoting Growth, Revenue, and Equity towards Socio-Economic Sustainability.

The DOF estimates generating P518.71 billion in fresh revenues from its tax reforms from 2027 to 2030, while granting P326.92 billion in tax relief, resulting in a net gain of P191.77 billion.

"The DOF is still studying and working on it. The President is aware that the department is carefully reviewing the proposal because he wants it passed as soon as possible," Castro said.

Asked whether the administration is targeting passage next year, Castro said Marcos wants the measure approved before the end of 2026.

ProGRESS forms part of the government’s tax reform package, which the DOF said would help finance priority programs announced by Marcos during his fifth State of the Nation Address.

‘Won’t burden ordinary Filipinos’

Responding to concerns that the proposed tax measures could add to the financial burden of consumers, Castro said the reforms are designed to have a limited impact on ordinary Filipinos.

“Some of the proposed taxes being discussed will not affect ordinary Filipinos. They will primarily affect those who buy luxury vehicles," Castro said.

Asked about the proposed taxes on sugary drinks, single-use plastics, and vape products, Castro said some of the measures are also intended to promote better public health.

"These are related to public health. It would be better if people avoid frequently consuming very sweet food and drinks," Castro said in Filipino.

The DOF has said the proposed tax reform package is expected to generate additional revenues to help fund priority government programs while providing fiscal space for planned tax relief measures and other social services.

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.

The President also proposed to exempt micro and small businesses from paying the minimum corporate income tax (MCIT), equivalent to 2% of gross income of a corporation for a period of 12 months.

Under the ProGRESS bill, the personal income tax-exempt ceiling adjustment would result in the following:

• The threshold for tax-exempt annual income increases from P250,000 to P350,000, giving low-to-middle earners annual savings of up to P15,000.
• The lower tax rates for the next tiers will provide annual savings of about P17,500 for anyone earning above P350,000.
• Individuals earning between P350,000 and P450,000 will pay 15% on the excess over P350,000.
• Individuals earning between P450,000 and P800,000 will pay a base tax of P15,000 plus 20% on the excess over P450,000.
• Those earning P800,000 to P2 million will pay P85,000 base tax plus 25% in excess over P800,000
• Individuals earning P2 million to P8 million will be charged a base tax of P385,000 plus 30% in excess over P2 million
• Earners of more P8 million will pay a base tax of P2.185 million plus 35% of excess over P8 million

Meanwhile, with the proposed minimum corporate income tax exemption, micro (with less than P3 million gross sales) and small (with gross sales between P3 million and P20 million enterprises will no longer be required to pay the MCIT, resulting in a total of P26.60 billion in revenue impact over the next four years.

To offset the foregone revenue from the tax cuts, the DOF proposes the following tax measures:

• Expansion of sugary drinks tax, with expected P296.97 billion in new revenues: Taxes on drinks using standard sweeteners will jump from P6 to P20 per liter, while high-fructose corn syrup drinks will face a P40 per liter tax. Frozen treats like ice cream, sorbet, and frozen yogurt will also be taxed, and previous exemptions for soy milk and 100% natural juices will be removed.
• Updating the Motor Vehicle Road User Tax, with expected P89.58 billion in additional revenues: Road user fees will be updated for inflation to fund road maintenance, adjusting rates that have remained unchanged for over two decades.
• Excise tax on plastics (P52.19 billion in new revenues): A new P150 per kilogram tax will target single-use plastics, including "sando" bags, "labo" bags, and sachets.
• Excise tax on vapes, e-cigarettes, and alcohol (P64.32 billion in new revenues): E-cigarettes will face a flat tax of P72.90, vape devices will have a new P150 per-unit tax, novel tobacco products will be taxed at P72.90 per two grams or milliliters, and taxes on distilled spirits will increase.
• Tax on “luxury” items (P15.64 billion additional revenue): A top tax tier of 75% will apply to luxury vehicles worth over P8 million, and private jets will be subject to excise taxes for the first time.

–NB, GMA News