House Speaker Isabela 6th district Rep. Faustino "Bojie" Dy III and Majority Leader Ilocos Norte 1st district Rep. Sandro Marcos have jointly filed a bill that would turn President Marcos' tax relief proposal for Filipinos into a reality.

Filed on Tuesday, July 28 or a day after President Marcos' fifth and penultimate State of the Nation Address (SONA) was House Bill (HB) No. 10345 .

The measure would allow Filipino workers keep a larger portion of their earnings by raising the annual tax-free income ceiling to P350,000 from the current P250,000.

"Raising the tax-free ceiling to P350,000 gives workers more room for food, tuition, medicine and the bills that do not wait,” Rep. Marcos said.

“President Marcos' SONA placed tax relief where families will feel it, in the pay they bring home after every cutoff, and Speaker Bojie Dy has made sure the House responds with a bill rather than applause alone," noted the presidential son.

The measure seeks to amend Section 24 of the National Internal Revenue Code by restructuring the graduated income tax rates imposed on Filipino citizens and resident aliens.

Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, individuals with annual taxable income not exceeding P250,000 have been exempt from income tax since 2018.

HB No. 10345 raises that threshold by P100,000, placing annual taxable income not exceeding P350,000 under the zero-percent tax bracket.

The proposed schedule sets a 15 percent rate for taxable income above P350,000 but not exceeding P400,000 and retains the succeeding marginal rates of 20 percent, 25 percent, 30 percent and 35 percent.

For income above P400,000, the measure retains the existing base taxes and graduated rates applying to the P400,000, P800,000, P2 million and P8 million thresholds.

Meanwhile, Married individuals will continue to calculate their respective income taxes separately, while income that cannot be exclusively attributed to either spouse will be divided equally between them.

Minimum wage earners will remain exempt from income tax on their taxable income, holiday pay, overtime pay, night shift differential pay and hazard pay.

Qualified self-employed individuals and professionals may also choose the 8 percent tax on gross sales, receipts and non-operating income exceeding the proposed P350,000 threshold, in place of graduated income tax and percentage tax.

Mixed-income earners will remain subject to the graduated rates on compensation income and the applicable graduated or optional 8 percent tax on income from business or professional practice.

“The President’s SONA gave us a clear standard: tax policy must remain responsible while recognizing how much the cost of living has changed, and Speaker Bojie Dy shares that practical approach. This measure updates the brackets for workers, professionals and small entrepreneurs so the tax code reflects present realities,” Rep. Marcos added.

The secretary of the Department of Finance (DOF), upon the recommendation of the Bureau of Internal Revenue (BIR) commissioner, will issue the implementing regulations within 90 days, while the law will take effect 15 days after its complete publication.