Senator Ejercito files bill expanding income tax exemption to ₱600,000 annually

Senate Senior Deputy Majority Leader JV Ejercito has filed a bill seeking to exempt from income tax workers earning up to ₱50,000 a month, or ₱600,000 annually, in a bid to increase the take-home pay of millions of Filipino employees amid the continued rise of the cost of living.

Under Senate Bill No. 2341, the proposed measure seeks to amend the National Internal Revenue Code by raising the income tax exemption threshold to ₱600,000 a year from the current ₱250,000 set under Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

“Hindi ito simpleng tax reform. Ito’y para sa ating middle-income earners na marangal na nagtatrabaho, nagbabayad ng buwis, at nag-aambag sa ekonomiya sa kabila ng mataas na presyo ng mga bilihin. Sila ang tunay na gulugod ng ating ekonomiya,” Ejercito said.

Ejercito said it is time to align the country's income tax system with the current economic conditions faced by Filipino families, particularly middle-income earners.

"Our tax system must remain responsive to the changing economic realities faced by every Filipino family," Ejercito said in the bill's explanatory note.

The senator noted that while the TRAIN Law reformed the income tax system in 2017, the economy has since changed significantly due to persistent inflation, rising fuel prices, and increasing costs of basic commodities, all of which have eroded workers' purchasing power.

"With stagnant wages, persistent inflation, and rising tax obligations, many middle-class earners face declining disposable income while remaining ineligible for government assistance programs primarily intended for low-income households," he added.

Under the proposal, employees earning up to ₱50,000 a month or ₱600,000 a year would no longer pay income tax, while those earning above the threshold would continue to be taxed under a revised graduated income tax schedule.

Citing the 2024 Philippine Statistics Authority (PSA) Labor Force Survey, Ejercito said an estimated 17.6 million full-time wage and salary workers in the private sector earn less than ₱600,000 annually and could benefit from the proposed measure.

"This measure primarily aims to reduce the tax burden of Filipino middle-class workers, safeguard their take-home pay, and strengthen their purchasing power," he said.

Ejercito stressed that the proposal is intended not only as a temporary response to inflation but as a long-term measure to support Filipino families.

"Our primary objective in proposing this measure is not to offer temporary relief, but to provide Filipino families with decent take-home pay from their hard-earned income. This measure seeks to acknowledge the value of middle-income earners and address their current vulnerable position," Ejercito said.

According to the senator, the bill also supports President Ferdinand Marcos Jr.'s call during his fifth State of the Nation Address (SONA) to expand the coverage of income tax exemptions to ease the burden on Filipino workers amid rising living costs.