Filipino workers earning up to PHP 350,000 a year could stop paying income tax entirely, under a Department of Finance proposal that is now moving through Congress as two parallel bills.
The headline number: the tax free ceiling jumps from PHP 250,000 to PHP 350,000, and earners between PHP 450,000 and PHP 800,000 get a flat PHP 17,500 annual tax cut.
Here is the full data on the proposed brackets, what you would actually save, and how the government plans to pay for it.
The proposal, in one line
President Marcos announced the tax relief push in his July 27, 2026 State of the Nation Address, and the Department of Finance packaged it as the PROGRESS bill: Promoting Growth, Revenue, and Equity toward Socio-economic Sustainability.
The House moved first, filing HB 10345 on July 29, 2026, filed by Speaker Faustino “Bojie” Dy III and Majority Leader Ferdinand Alexander “Sandro” Marcos.
Both versions agree on the core change: raise the annual tax free income ceiling from PHP 250,000 to PHP 350,000.
The proposed brackets, compared to today
Here is the complete comparison of the current TRAIN law brackets and the DOF proposal, per the Congress press release and the Inquirer’s reporting on the DOF numbers.
| Annual taxable income | TRAIN (current) | DOF proposal |
|---|---|---|
| Up to PHP 250,000 | 0% | 0% |
| PHP 250,001 – 350,000 | 15% of excess over 250K | 0% (new tax free zone) |
| PHP 350,001 – 400,000 | 15% of excess over 250K | 15% of excess over 350K |
| PHP 400,001 – 450,000 | PHP 22,500 + 20% of excess over 400K | 15% of excess over 350K |
| PHP 450,001 – 800,000 | PHP 22,500 + 20% of excess over 400K | PHP 15,000 + 20% of excess over 450K |
| PHP 800,001 – 2,000,000 | PHP 102,500 + 25% of excess over 800K | PHP 102,500 + 25% of excess over 800K |
| PHP 2,000,001 – 8,000,000 | PHP 402,500 + 30% of excess over 2M | PHP 402,500 + 30% of excess over 2M |
| Over PHP 8,000,000 | PHP 2,202,500 + 35% of excess over 8M | PHP 2,202,500 + 35% of excess over 8M |
The brackets above PHP 800,000 are untouched. This is a middle class focused reform, not a top bracket overhaul.
What you would actually save
We ran the math on both tax schedules at every income level, and here is the exact annual and monthly impact.
| Annual income | Tax now (TRAIN) | Tax proposed (DOF) | Annual savings | Monthly savings |
|---|---|---|---|---|
| PHP 250,000 | PHP 0 | PHP 0 | PHP 0 | PHP 0 |
| PHP 300,000 | PHP 7,500 | PHP 0 | PHP 7,500 | PHP 625 |
| PHP 350,000 | PHP 15,000 | PHP 0 | PHP 15,000 | PHP 1,250 |
| PHP 400,000 | PHP 22,500 | PHP 7,500 | PHP 15,000 | PHP 1,250 |
| PHP 450,000 | PHP 32,500 | PHP 15,000 | PHP 17,500 | PHP 1,458 |
| PHP 500,000 | PHP 42,500 | PHP 25,000 | PHP 17,500 | PHP 1,458 |
| PHP 600,000 | PHP 62,500 | PHP 45,000 | PHP 17,500 | PHP 1,458 |
| PHP 700,000 | PHP 82,500 | PHP 65,000 | PHP 17,500 | PHP 1,458 |
| PHP 800,000 | PHP 102,500 | PHP 85,000 | PHP 17,500 | PHP 1,458 |
| PHP 1,000,000 | PHP 152,500 | PHP 152,500 | PHP 0 | PHP 0 |
The savings story is clean: a maximum of PHP 15,000 for earners up to PHP 400,000, then a flat PHP 17,500 for the PHP 450,000 to PHP 800,000 band, and zero savings above PHP 800,000.
The cost: PHP 326.92 billion
Tax cuts this size do not come free. The DOF estimates the expanded exemptions will cost PHP 326.92 billion in forgone revenue from 2027 to 2030.
The personal income tax exemption alone accounts for PHP 300.33 billion of that, while exempting micro and small enterprises from the minimum corporate income tax trims another PHP 26.6 billion.
The government plans to offset the loss with an expanded set of sin taxes, wealth taxes, and new levies, projected to generate PHP 518.71 billion between 2027 and 2030.
That arithmetic produces a net fiscal gain of nearly PHP 192 billion.
Where the replacement revenue comes from
Here is the complete list of offsetting tax measures in the DOF package, straight from the Inquirer’s DOF reporting.
| Measure | Proposed rate |
|---|---|
| Sweetened beverage excise | PHP 20 per liter (sugar), PHP 40 per liter (high fructose corn syrup) |
| E-cigarette excise | PHP 72.90 unified, 5% indexation from 2028 |
| Vape device excise | PHP 150 per unit |
| Oral nicotine pouches | PHP 72.90 per 2 grams or 2 milliliters |
| Distilled spirits | Annual 6% indexation from 2031 |
| Plastic products (sando bags, labo bags, sachets) | PHP 150 per kilogram, 5% annual indexation |
| Automobile excise | New 75% tier for vehicles over PHP 8 million |
| Private jets | Included among nonessential goods subject to excise |
| Motor vehicle road user’s tax | Adjusted for cumulative inflation (unchanged for 20+ years) |
The package also removes tax exemptions for soy milk and 100 percent natural fruit and vegetable juices, and extends the levy to ice cream and yogurt.
Who still pays nothing, and the fine print
Minimum wage earners remain fully 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 can still choose the optional 8 percent tax on gross sales and receipts instead of the graduated rates.
Married individuals continue to file separately, with income that cannot be attributed to either spouse divided equally between them.
The Department of Finance, on the recommendation of the BIR commissioner, must issue implementing regulations within 90 days of enactment, and the law takes effect 15 days after its complete publication.
The bottom line
The DOF’s PROGRESS bill and HB 10345 would together hand the middle class a real, immediate tax cut: PHP 15,000 a year for earners around PHP 350,000 to PHP 400,000, and a flat PHP 17,500 for everyone up to PHP 800,000.
Workers earning PHP 350,000 or less would pay zero income tax, and the monthly math works out to between PHP 625 and PHP 1,458 extra take home pay.
The trade off is equally clear: the PHP 326.92 billion cost gets paid for by higher sin taxes, plastic taxes, and luxury taxes on private jets and cars over PHP 8 million.
If you earn between PHP 250,000 and PHP 800,000 a year, this is the most direct tax relief proposal in years. Check your bracket, run the numbers, and watch the bill’s progress through Congress.
