Tiangco Files Bill to Raise Tax-Free Income Threshold to ₱350,000

House Bill No. 10451 could give Filipino workers up to ₱15,000 in annual tax savings while adjusting the country’s income tax brackets.

Navotas City Rep. Tobias “Toby” Tiangco has filed a measure seeking to raise the annual personal income tax exemption threshold from ₱250,000 to ₱350,000.

House Bill No. 10451 would exempt individuals with annual taxable income of ₱350,000 or less from paying personal income tax. It would also adjust the succeeding income tax brackets to preserve the progressive structure of the Philippine tax system.

Under the proposal, workers earning above the new exemption threshold could also receive tax savings of up to ₱15,000 annually. This is equivalent to as much as ₱1,250 in additional take-home pay each month.

It is important to note that the proposed threshold applies to taxable income, which may differ from a person’s gross annual salary after applicable exclusions, deductions, and benefits are considered.

How the proposed tax exemption could help workers

The current individual income tax schedule exempts taxable income of up to ₱250,000.

For taxable income above ₱250,000 but not exceeding ₱400,000, the current rate is 15 percent of the amount exceeding ₱250,000. This schedule has applied since January 1, 2023.

This means a person with exactly ₱350,000 in annual taxable income would currently have an income tax liability of ₱15,000:

₱350,000 minus ₱250,000 = ₱100,000

15 percent of ₱100,000 = ₱15,000

If the bill becomes law as proposed, the same ₱350,000 in taxable income would fall within the tax-exempt bracket.

Tiangco said the additional money could help families cover food, transportation, electricity, medicine, and other daily expenses.

“Sa panukalang batas, hindi na magbabayad ng income tax ang mga may annual taxable income na ₱350,000 pababa,” Tiangco said.

“Makikinabang din ang mga kumikita nang higit dito dahil maaari silang makatipid ng hanggang ₱15,000 sa buwis bawat taon. Katumbas ito ng dagdag na ₱1,250 sa kanilang buwanang kita.”

Proposed relief for the working middle class

Tiangco said the measure is intended particularly for working and middle-income Filipinos whose disposable income has been reduced by rising prices.

He noted that many middle-class households earn too much to qualify for government assistance but continue to struggle with the increasing costs of food, electricity, transportation, housing, and healthcare.

“Hindi lang tax exemption ang layunin ng batas na ito,” Tiangco said. “Inaayos din natin ang tax schedule para maging mas patas sa lahat ng manggagawa, lalo na sa middle class na madalas naiipit.”

The current ₱250,000 exemption threshold was introduced under the Tax Reform for Acceleration and Inclusion or TRAIN Law, which took effect in 2018. The law also provided a second set of lower individual income tax rates beginning in 2023.

Tiangco argued that the exemption threshold should now be updated to reflect the higher cost of living and the reduced purchasing power of Filipino families.

Proposal follows Marcos’ tax relief call

The measure follows President Ferdinand Marcos Jr.’s call for Congress to pursue tax relief for workers and small businesses.

During his State of the Nation Address on July 27, 2026, Marcos asked lawmakers to consider expanding the personal income tax exemption to cover workers earning up to ₱350,000 in annual taxable income.

The House Committee on Ways and Means has also expressed support for studying the administration’s proposed tax relief agenda, including the higher personal income tax exemption threshold.

Tiangco said allowing workers to retain a larger portion of their earnings could provide immediate household relief while supporting local economic activity.

“Kapag mas malaki ang naiuuwi ng mga manggagawa, mas may kakayahan silang gumastos,” he said. “Nakakatulong ito sa mga lokal na negosyo at nagpapalakas sa ekonomiya.”

What happens next?

House Bill No. 10451 proposes to amend Section 24 of the National Internal Revenue Code.

However, the ₱350,000 exemption is not yet in effect. The measure must pass the House of Representatives and Senate, undergo possible revisions, and receive the President’s signature before becoming law.

The final exemption level, tax brackets, implementation date, and detailed rules may still change during congressional deliberations.

For Filipino workers, the proposal presents a straightforward goal: update the tax system to reflect current economic conditions and allow households to keep more of what they earn.