Tax incentives extended to schools are helping ease pressure for tuition increases as institutions grapple with rising operational costs, the Department of Education (DepEd) said on Wednesday, April 8.

DepEd Secretary Sonny Angara said this as he highlighted the significant role of existing tax incentives in helping schools and private partners manage higher fuel, transport, and logistics expenses without fully passing these on to students.

“Aligned with President Bongbong Marcos’ priority to shield education from economic volatility, these incentives enable schools and their partners to maximize limited resources and free up funds for teaching and learner support,” Angara said.

“By reducing tax burdens, they help cushion the impact of rising costs and sustain continued investment in education,” he added.

Among the key provisions is the exemption of tuition and other educational services from the 12 percent value-added tax (VAT), which directly reduces costs for families.

Non-stock, non-profit educational institutions are also exempt from income tax, provided their revenues are used exclusively for educational purposes. Proprietary schools, meanwhile, benefit from a preferential 10 percent income tax rate under existing laws.

Angara added that schools may also import books and educational materials tax- and duty-free, while availing themselves of tax credits for VAT paid on renewable energy equipment to lower long-term operational expenses.

President Marcos’ administration also reaffirmed its support for private sector participation in education through the Adopt-a-School Program, where donations are eligible for 150% deductibility.

Depending on the structure of the transaction, donations may also be treated as VAT-exempt or as a VATable “deemed sale,” with the corresponding entitlement to input VAT credits.

Under the Tax Code, donations may also be exempt from donor’s tax, provided they meet administrative use limitations to ensure resources are directed toward educational purposes.

Registered business enterprises (RBEs) donating capital equipment to government agencies, state universities, or DepEd-accredited schools may also qualify for exemption from donor’s tax and customs duties.

For companies investing in workforce development, DepEd said enterprises can avail of a 150% deduction on training expenses. This deduction is set to increase to 175% starting January 1, 2028.