HOUSE Speaker Faustino “Bojie” Dy III and House Majority Leader Ferdinand Alexander “Sandro” Marcos have filed a bill seeking to raise the annual tax-free income threshold to P350,000.
Dy and Marcos filed House Bill No. 10345 on Tuesday, July 28, 2026, a day after President Ferdinand Marcos Jr., in his fifth State of the Nation Address (Sona), urged Congress to increase the annual income tax exemption threshold from P250,000 to P350,000.
The proposed measure seeks to amend Section 24 of the National Internal Revenue Code by restructuring the graduated income tax rates for Filipino citizens and resident aliens.
If enacted, the following income tax schedule will take effect on January 1, 2027:
* P350,000 and below – 0 percent
* Over P350,000 but not over P400,000 – 15 percent of the excess over P350,000
* Over P400,000 but not over P800,000 – P22,500+ 20 percent of the excess over P400,000
* Over P800,000 but not over P2,000,000 – P102,500 + 25 percent of the excess over P800,000
* Over P2,000,000 but not over P8,000,000 – P402,500 + 30 percent of the excess over P2,000,000
* Over P8,000,000 – P2,202,500 + 35 percent of the excess over P8,000,000
The bill provides that married individuals will continue to compute their income taxes separately, while income that cannot be exclusively attributed to either spouse will be divided equally between them.
Minimum wage earners will remain exempt from income tax on their taxable income, holiday pay, overtime pay, night shift differential pay and hazard pay.
Qualified self-employed individuals and professionals may also opt to pay an eight percent tax on gross sales, receipts and non-operating income exceeding the proposed P350,000 threshold, in lieu of the graduated income tax and percentage tax.
Meanwhile, mixed-income earners will continue to be subject to the graduated income tax on compensation income and either the graduated rates or the optional eight percent tax on income from business or professional practice.
Earlier, Dy assured that the House of Representatives would prioritize the passage of the legislative measures outlined by the President in his Sona, including amendments to the Electric Power Industry Reform Act (EPIRA) to remove system loss charges from consumers’ electricity bills. (TPM)