The Department of Finance has a name for its grand tax retooling: the ‘Progress Bill’, short for Promoting Growth, Revenue, and Equity toward Socio-economic Sustainability. On paper it is simple to describe, harder to swallow: raise the tax-free ceiling, cut middle-class income tax, and pay for it all with bigger ‘sin’ and wealth taxes. Here is the package, and the numbers behind who wins and who pays.
The latest income tax brackets
The centerpiece raises the personal income tax exemption to P350,000 a year from the current P250,000, and reworks the brackets above it so the middle class keeps more of its pay.
| Annual income | Proposed tax (Philippine pesos) |
|---|---|
| Up to P350,000 | Exempt |
| P350,000 to P450,000 | 15% of the amount over P350,000 |
| P450,000 to P800,000 | P15,000 + 20% of the amount over P450,000 |
The payoff is direct: earners above P350,000 can expect a fixed annual saving of P17,500, while those in the P250,000 to P350,000 band save up to P15,000. It is the same bracket math the earlier DOF proposal laid out in detail, now folded into a single omnibus bill.
The bill a machine: where the money comes back
The tax relief is not free. The Finance department projects P518.71 billion in new revenues from 2027 to 2030 to offset P326.92 billion in losses from income and corporate tax cuts, leaving a net gain of about P191.77 billion. The load falls on products and wealth that the government deems fair game.
| Measure | Projected revenue, 2027-30 |
|---|---|
| Sugar-sweetened beverage excise (P6 to P20/L, HFCS P40) | P296.97 billion |
| Plastics tax (P150 per kg: sando, labo, sachets) | P52.19 billion |
| E-cigarettes, vapes, novel tobacco | P33.06 billion |
| Distilled spirits (higher excise) | P31.26 billion |
| Luxury autos > P8M (75% tier) + private jets | P15.64 billion |
| Road users’ vehicle (MVRUT) inflation adjustment | P89.58 billion |
Counterbalancing that is the revenue given away: about P300.33 billion from the income-tax overhaul plus P26.6 billion from exempting micro and small enterprises from the minimum corporate income tax.
Who saves, who pays
Finance Undersecretary Karlo Adriano’s argument is that workers come out ahead even after paying more on the products being taxed: ‘The savings they will get from personal income tax are higher than the additional spending for sugar-sweetened beverages, tobacco and plastics.’ The catch, he acknowledged, is that the extra costs land on items that are effectively vices, so the trade is deliberate.
- Wins: middle-income workers (up to P17,500/yr saved), small business exempt from MCIT
- Pays more: drinkers of sweetened beverages, smokers and vapers, heavy plastic users, buyers of P8M-plus cars
- Watch: Budget Secretary Kim De Leon warns of a ‘balancing act’ to keep the budget sustainable
The bigger question
Economists caution that without inflation-indexing, today’s ‘bracket creep’ could silently undo the relief within a few years, and the Senate version differs from the House approach, as the SONA promised tax relief this year. Whether the Progress Bill becomes law in 2027 as the DOF hopes, and whether the wealthy actually absorb their share, is the test that will decide if this is real middle-class relief or just a reshuffle of who pays.
