Philippines House Panel Approves P350,000 Tax-Free Income Threshold
The Philippine House committee on ways and means approved a bill raising the annual income tax exemption to P350,000 from P250,000. This measure aims to boost take-home pay for low- and middle-income workers.
New Tax Threshold Endorsed
The Philippine House committee on ways and means endorsed a bill increasing the annual income tax exemption threshold to P350,000. House Bill No. 10345, sponsored by Speaker Faustino “Bojie” Dy III and Majority Leader Sandro Marcos, received committee approval on Monday, August 10.
This proposal amends Section 24 of the National Internal Revenue Code, raising the tax-free ceiling from the current P250,000. The move aligns with President Ferdinand Marcos Jr.’s recent address, which called for tax relief for the middle class.
Impact on Worker Take-Home Pay
This legislative change means workers earning P350,000 or less per year will no longer pay annual income tax. Individuals earning P29,000 or less monthly would see no withholding tax deductions from their salaries. House committee chairperson Miro Quimbo (Marikina 2nd district) stated the measure ensures the tax system reflects workers' current financial realities. He explained that if incomes lag behind the rising cost of living, taxation should not further reduce purchasing power.
Fiscal Balance and Other Relief
Quimbo highlighted P350,000 as the “most balanced” threshold, balancing taxpayer relief with government resource sustainability. He dismissed higher proposals, some suggesting P600,000 or even P1 million, citing their significant negative impact on revenue collection.
Quimbo noted such higher exemptions would primarily benefit the upper-middle class and wealthier segments, leading to substantial revenue losses for the government. The panel also passed House Bill No. 10346, which seeks to exempt micro and small businesses from the 2% minimum corporate income tax.
The approved bill now moves to the committee on rules for calendaring a second reading, followed by full House deliberation, amendments, and voting. For businesses, this legislative shift could translate into increased disposable income for a significant portion of the Philippine workforce.
This may lead to higher consumer spending, particularly in the retail and consumer goods sectors. Additionally, the proposed exemption for micro and small businesses from minimum corporate income tax could reduce operational costs for these entities, potentially stimulating local investment and growth.
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