The Philippine Department of Labor and Employment (DOLE) has backed President Ferdinand Marcos Jr.'s proposal to increase the annual tax-free income threshold to P350,000, describing the measure as a step that would allow more workers, particularly those in the middle-income bracket, to take home a larger share of their earnings.
The proposal was announced by President Marcos during his fifth State of the Nation Address (SONA), where he urged lawmakers to expand the income tax exemption threshold as part of broader tax reform efforts aimed at supporting households still recovering from recent economic challenges.
"Let us increase the number of workers who are exempt from paying income tax. We will now include those earning up to P350,000 a year... to ensure the continued progress of the middle class amidst the lingering effects of the crisis, we will pursue tax relief measures that promote growth, generate revenue, and advance equity toward socio-economic sustainability," President Marcos said.
Under the proposal, individuals earning up to P350,000 annually would no longer be required to pay income tax, extending tax relief beyond minimum wage earners to a larger segment of the workforce.
Labor Secretary Francis Tolentino welcomed the initiative, saying it would benefit a wider group of employees.
"If the threshold is set at P350,000 and below, it will definitely help more people—not only minimum wage earners, but also those earning somewhat above the minimum wage," Tolentino said.
The Labor Secretary also stressed that implementing the proposal would require amendments to the National Internal Revenue Code (NIRC), calling on Congress to prioritise the legislation.
"The amendment of the NIRC should be done as soon as possible, that was the call last night. It requires an Act of Congress, so if it is treated as a priority, it can be passed very quickly," he said.
Tolentino expressed confidence that lawmakers could move swiftly on the measure, raising hopes that legislative action could be completed before the end of the year if it is treated as a priority.
If approved, the proposed tax reform is expected to provide greater disposable income for millions of Filipino workers while supporting the government's broader objective of strengthening the country's middle class through targeted fiscal relief.