House Speaker Faustino “Bojie” Dy III and Majority Leader Ferdinand Alexander “Sandro” Marcos introduced House Bill 10345 on July 28, 2026, to raise the annual tax-free income ceiling from P250,000 to P350,000.
The proposed legislation follows President Ferdinand “Bongbong” Marcos Jr.’s fifth State of the Nation Address on July 27, 2026, urging Congress to increase the income tax exemption threshold to ease financial burdens on Filipino workers.
If passed into law, individuals earning up to P350,000 annually will be exempt from income tax starting January 1, 2027, while those earning more will face adjusted graduated tax rates.
MILLIONS of Filipino workers could soon keep more of their hard-earned money under a new measure filed in the House of Representatives.
House Speaker Faustino “Bojie” Dy III and House Majority Leader Ferdinand Alexander “Sandro” Marcos have introduced House Bill (HB) 10345, which seeks to raise the country's annual tax-free income ceiling from P250,000 to P350,000.
If the bill becomes law, individuals earning up to P350,000 every year will no longer pay income tax starting Jan. 1, 2027. Those earning above that amount will see adjusted graduated tax rates.
The proposal was filed on Tuesday, July 28, 2026, just a day after President Ferdinand “Bongbong” Marcos Jr. urged Congress during his fifth State of the Nation Address (Sona) on July 27 to increase the income tax exemption threshold to help ease the financial burden on working Filipinos.
The bill seeks to amend Section 24 of the National Internal Revenue Code to restructure the graduated income tax rates for Filipino citizens and resident aliens.
Under HB 10345, the revised annual tax rates would be structured as follows:
The bill preserves several key provisions from current tax rules:
Married couples will continue to compute their income taxes separately. Any income that cannot be linked exclusively to one spouse will be divided equally between both.
Minimum wage earners will remain fully exempt from income taxes on their taxable income, including holiday pay, overtime pay, night shift differential pay, and hazard pay.
Self-employed individuals and qualified professionals can still choose an optional eight percent tax on gross sales, receipts, and non-operating income above the proposed P350,000 limit instead of paying the regular graduated tax.
Mixed-income earners will remain subject to standard tax rates on their compensation, but can choose between regular rates or the optional eight percent tax for their business or professional earnings.
To take effect, the bill must be passed by both the House of Representatives and the Senate before being sent to President Marcos for final approval or veto.
Speaker Dy emphasized that the House will prioritize key measures highlighted by the President in his Sona. Alongside tax reform, lawmakers are focusing on proposed amendments to the Electric Power Industry Reform Act (Epira) to remove system loss charges from electricity bills and lower consumer power costs.