Filipino workers may soon keep more of their pay. Multiple bills have been filed in both chambers of Congress to raise the income tax exemption ceiling, and the most popular proposal moves the tax-free threshold from PHP 250,000 to PHP 350,000 a year.
Here is what is on the table, who filed what, and what each proposal would mean for your take-home pay.
The current rule
Under the TRAIN law, individuals with annual taxable income not exceeding PHP 250,000 have been exempt from income tax since 2018.
That threshold has not changed in eight years. Senators and House members argue that wage increases have pushed minimum wage and entry level workers into the tax net without improving their purchasing power.
“The prices of food, transport, and electricity have followed, and they have risen faster than wages,” Senate President Pro Tempore Vicente Sotto III said.
The PHP 350,000 proposals
Two separate bills target the PHP 350,000 ceiling.
Sotto filed Senate Bill No. 2338, the Expanded Income Tax Exemption Act of 2026, which would take effect Jan. 1, 2027.
In the House, Majority Leader Sandro Marcos and Speaker Faustino Dy III filed House Bill No. 10345 to do the same, translating a key tax relief proposal from the President’s SONA into legislation.
Both bills raise the zero percent bracket to PHP 350,000 and set a 15 percent rate for income above PHP 350,000 but not exceeding PHP 400,000.
The succeeding brackets keep their existing rates of 20, 25, 30, and 35 percent, with the base amounts adjusted to reflect the higher exemption.
Under the proposed schedule, taxpayers earning above PHP 350,000 would also pay PHP 15,000 less in annual income taxes.
The higher proposals
PHP 350,000 is not the most ambitious number in circulation. Senate President Win Gatchalian has floated a version raising the exemption to PHP 400,000.
A separate Senate bill proposes going further, to PHP 500,000 annually. Analysts have argued the ceiling should be even higher, with some suggesting PHP 1 million, but no filed bill goes that far yet.
Each higher number means bigger tax relief for workers, but also larger revenue losses for the government, which is why the PHP 350,000 proposals are the ones with the strongest momentum.
What stays the same
Minimum wage earners remain exempt from income tax on their regular pay, holiday pay, overtime pay, night shift differential pay, and hazard pay.
Qualified self-employed individuals and professionals may still choose the 8 percent tax on gross sales, receipts, and non-operating income exceeding the proposed PHP 350,000 threshold, in place of graduated rates.
Married individuals continue to calculate their income taxes separately, with income that cannot be exclusively attributed to either spouse divided equally.
What happens next
The bills amend Section 24 of the National Internal Revenue Code, so they must pass through committee deliberations, floor votes in both chambers, and a bicameral conference before reaching the President.
The Department of Finance, on the recommendation of the Bureau of Internal Revenue, would have 90 days to issue implementing rules and revise the withholding tax tables once a version becomes law.
The law would take effect 15 days after complete publication.
The bottom line
Zero income tax for annual earnings up to PHP 350,000 is the flagship proposal, backed by bills in both chambers and endorsed by the President’s SONA. Higher versions at PHP 400,000 and PHP 500,000 remain on the table.
For a worker earning PHP 350,000 a year, any of these bills means the full year’s income stays untaxed, roughly PHP 15,000 or more in annual savings depending on which version passes.
For everyone else, the bracket restructuring means smaller tax bills across the board, even if the zero bracket itself does not cover their income. Watch the 19th Congress, this one is moving fast.
