By el Amigo
MANILA – Filipino employees could enjoy larger take-home pay under a bill introduced by Senate President Pro Tempore Vicente Sotto III, which seeks to raise the annual income tax exemption threshold from PHP250,000 to PHP350,000 effective Jan. 1, 2027.
Filed as Senate Bill No. 2338, the proposed Expanded Income Tax Exemption Act of 2026 aims to provide broader tax relief by exempting an additional PHP100,000 in annual income from taxation.
Sotto said the proposal recognizes the growing financial pressure faced by workers as inflation and higher living costs continue to reduce the value of their salaries.
He noted that despite wage adjustments over the years, many workers have become subject to income taxes even though their earnings have not kept pace with rising prices of essential goods and services.
The senator also cited escalating costs of food, electricity, fuel, and transportation, as well as global oil supply uncertainties linked to developments in the Middle East, as factors affecting Filipino households.
The filing follows President Ferdinand R. Marcos Jr.’s appeal during his fifth State of the Nation Address for Congress to expand income tax relief to benefit more workers.
The bill does not alter the country’s existing marginal income tax rates but revises the tax brackets to align with the proposed higher exemption ceiling.
If enacted, taxpayers earning above PHP350,000 annually would save approximately PHP15,000 in income taxes. Individuals earning more than PHP350,000 but not exceeding PHP400,000 would pay a 15-percent tax on income beyond the new exemption threshold, while higher-income earners would continue to be taxed under the current 20- to 35-percent rates.
The measure likewise requires the Department of Finance, through the Bureau of Internal Revenue, to release the implementing rules and update withholding tax schedules within 90 days from the law’s effectivity.
Sotto said the proposed legislation is designed to help Filipino workers retain more of their earnings and better cope with increasing household expenses.
elamigo/xf
