The Proposed ₱350,000 Tax-Free Income Ceiling: What Would Change (If It Passes)

This article describes a pending legislative proposal, not current Philippine tax law. The “Progress Bill” — principally House Bill No. 10345, with counterpart Senate versions — would raise the personal income tax exemption ceiling from ₱250,000 to ₱350,000 and shift the brackets above it. As of September 12, 2026, it has cleared only one House committee — it has not passed Congress or been signed into law. The ₱250,000 exemption under the TRAIN Law remains legally effective today.

Because a proposal like this generates a lot of “the tax-free ceiling is now ₱350,000” chatter before it is actually enacted, the sections below repeat the proposal/current-law distinction at each turn — treat every peso figure in the “if it passes” sections as illustrative of a bill still moving through Congress, not as an amount you can rely on for filing or payroll today. For how withholding actually works right now, see How to Compute Withholding Tax on Compensation Using the BIR Withholding Tax Table and How to Compute Individual Income Tax Using the BIR Graduated Tax Table.

What the Progress Bill actually proposes #

The Progress Bill is a legislative proposal — not an enacted law — to raise the annual personal income tax exemption ceiling from ₱250,000 to ₱350,000 and shift the graduated tax brackets above it upward. It grew out of President Marcos’s July 27, 2026 State of the Nation Address (SONA), where he called on Congress to expand the exempt bracket. Speaker Faustino “Bojie” Dy III and Majority Leader Ferdinand Alexander “Sandro” Marcos filed House Bill No. 10345 the following day to carry out that call, while Senators Sotto and Pangilinan filed separate but similar Senate measures raising the same threshold.

In his SONA, President Marcos told Congress:

“Dagdagan natin ang mga manggagawang malilibre sa buwis sa kanilang kita. Isasama na natin ang mga kumikita nang hindi lalagpas sa P350,000 kada taon.” (“Let’s increase the number of workers exempted from tax on their income. We will include those earning up to ₱350,000 per year.”)

— President Ferdinand Marcos Jr., State of the Nation Address, July 27, 2026, as reported by GMA News Online

“Progress Bill” is also used as shorthand for “ProGRESS,” reported as standing for “Promoting Growth, Revenue, and Equity towards Socio-economic Sustainability” — the Palace’s broader label for this tax relief and revenue package, not a formal statutory short title yet fixed in the bill text as filed. The Department of Finance (DOF) estimates roughly six million Filipino workers would benefit if the ceiling rises to ₱350,000, with take-home pay increasing by as much as ₱15,000 a year for someone earning at that level (Philippine News Agency, August 2026).

Current status as of September 2026 — still a bill, not a law #

As of this writing, the Progress Bill has cleared only one committee in one chamber of Congress; it is not law and has no effective date. House Bill No. 10345 passed the House Committee on Ways and Means on August 10, 2026, “subject to style,” meaning the committee report still needed to be finalized before the bill could be calendared for second reading on the House floor (Philstar.com, August 11, 2026).

For a bill to become law in the Philippines, it must independently pass three readings in the House, pass three readings in the Senate (where Senators Sotto and Pangilinan’s separate versions would need to be reconciled with the House version, typically through a bicameral conference committee), and then be signed by the President — or lapse into law without a signature after a set period. As of September 12, 2026, none of those remaining steps has occurred. News coverage has cited a proposed effectivity of January 1, 2027 if the bill is enacted in time, but that date is the bill’s own target, not a locked-in commencement date, since it depends entirely on how quickly the remaining legislative steps are completed.

Until a bill reaches all of these stages and is signed, the ₱250,000 exemption ceiling under the TRAIN Law stays in effect — employers, payroll providers, and taxpayers should keep computing and withholding tax exactly as they do now.

Why raising the floor would also change tax above ₱350,000 #

A common misreading of this proposal is that it would only help people who currently earn less than ₱350,000. In fact, because the bill would shift the entire bracket schedule upward, not just the exempt floor, workers earning well above ₱350,000 would also owe less tax than under the current table — they just would not become fully tax-exempt. This is the mechanical link the BIR itself has pointed out about the proposal: raising the zero-tax baseline requires re-anchoring every bracket line above it to the new floor, or the brackets compress and effectively raise marginal rates on middle-income earners relative to today.

The BIR has said that if the exemption ceiling becomes ₱350,000, “all the lines in the brackets will also adjust,” so that “all individuals who earn an income” — not only those newly falling below the exempt line — see a benefit, and that the DOF, on the BIR’s recommendation, would have 90 days after enactment to issue implementing rules and a revised withholding tax table (Inquirer.net, August 2026). Tax practitioners covering the bill have separately flagged that a fixed peso ceiling — ₱350,000 today — is vulnerable to erosion by inflation over time unless the exemption and brackets are indexed going forward, a “bracket creep” concern raised in coverage from BusinessWorld (August 16, 2026).

Neither the exact revised bracket amounts above ₱350,000 nor the mechanics of the 90-day implementing-rules process have been finalized in the bill text as publicly reported. Any specific “new bracket” figures beyond the ₱350,000 floor itself are not yet fixed by law — see the illustrative example below for why that distinction matters for a worked computation.

Worked example: illustrative only, because the new brackets are not law #

The example below is hypothetical and for illustration only — it is not the BIR’s or Congress’s actual proposed bracket table, because no such revised table has been enacted or officially published yet. It shows how a ₱30,000-a-month employee’s annual withholding tax would look under today’s confirmed TRAIN Law table, compared with one simple, proportional way the brackets could shift if the exemption ceiling and all brackets above it moved up by the same 40% (₱350,000 ÷ ₱250,000) the bill applies to the floor.

Assume Employee A earns a flat ₱30,000 a month with no other taxable allowances, for annual taxable compensation of ₱360,000.

Under the current, legally effective table (TRAIN Law graduated rates, Annex E of RR No. 11-2018, effective since January 1, 2023):

If the exemption ceiling and every bracket line above it were scaled up by the same proportion the bill applies to the floor (₱250,000 → ₱350,000, a 40% increase) — illustrative only, not the bill’s actual published brackets:

On this illustration, Employee A’s annual tax would fall from ₱16,500 to roughly ₱1,500 — a difference of about ₱15,000, which lines up with the DOF’s own public estimate of the take-home-pay gain for someone near the ₱350,000 level. The point of this example is the mechanism (a proportionally higher floor plus proportionally higher brackets benefits earners above the floor too), not the precise peso amount, since the real implementing table — if the bill passes — would be set by the DOF and BIR within 90 days of enactment and could use a different bracket structure than simple proportional scaling.

The DOF’s proposed offsetting revenue measures #

Raising the exemption ceiling would reduce government revenue, so the DOF has proposed a package of new and higher taxes on selected goods to offset the loss — none of which has been passed either. The DOF has estimated the income tax relief (plus removing the minimum corporate income tax for micro and small enterprises) at roughly ₱70–82 billion in average annual foregone revenue, or about ₱326.92 billion cumulatively from 2027 to 2030 (BusinessWorld, August 4, 2026).

To offset that, the DOF’s proposal reportedly includes:

• Sweetened beverages — raising the excise tax from ₱6 to ₱20 per liter for drinks using regular sweeteners, and up to ₱40 per liter for high-fructose-corn-syrup drinks.
• Vapor products and heated tobacco — a unified excise rate reported at roughly ₱72.93 per applicable unit (per milliliter of salt or freebase nicotine, or per pack of heated tobacco sticks).
• Alcohol — a higher excise on distilled spirits (reported at roughly ₱157.21 per proof liter) and a new tax on premixed alcoholic drinks (“alcopops”).
• Single-use plastics — a new excise of ₱150 per kilogram on flexible plastic packaging such as sando bags and sachets.
• A wealth tax on ultra-high-net-worth individuals, alongside higher taxes on luxury vehicles and private aircraft.

The DOF projects these measures could generate roughly ₱518.71 billion from 2027 to 2030 — more than the estimated foregone revenue — for a net revenue gain, according to its own figures (GMA News Online, August 2026). Every rate and figure in this section is a proposal under discussion, not an enacted excise schedule — consumers and businesses in these sectors should not assume any of these rates apply until Congress passes, and the President signs, the corresponding revenue bill.

What employers and taxpayers should do right now #

Nothing changes in day-to-day compliance yet — the correct action today is to keep filing and withholding under current law while watching the bill’s progress, not to anticipate a ceiling that has not been enacted. Concretely:

1. Keep withholding at ₱250,000. Payroll systems and the BIR withholding tax table (Annex E of RR No. 11-2018) remain unchanged; do not adjust cutoffs based on the proposed ₱350,000 figure.
2. Continue issuing BIR Form 2316 on the existing schedule and thresholds, since substituted filing and annualization rules have not changed.
3. Track the bill through second and third reading, then Senate passage and bicameral reconciliation — each is a real, separate hurdle, not a formality, given the House and Senate versions differ in detail.
4. Watch for the actual BIR implementing regulations if and when the bill is signed — those regulations, not this article or any news report, will set the real revised withholding tax table and effective date.
5. Expect a lastmod update to this article once the bill’s status changes materially (a chamber passage, a signed law, or a BIR issuance) — check back rather than treating today’s snapshot as permanent.

FAQ #

Is the ₱350,000 income tax exemption ceiling law yet? #

No — as of September 12, 2026, this is a pending legislative proposal, not current law. House Bill No. 10345 (the “Progress Bill”) cleared the House Ways and Means Committee on August 10, 2026, but still needs House second and third reading approval, a counterpart or reconciled version passed by the Senate, and the President’s signature before it takes effect. The current, legally effective threshold remains ₱250,000 under the TRAIN Law (Republic Act No. 10963).

What is the “Progress Bill”? #

The Progress Bill is the informal name for the tax relief and revenue package President Ferdinand Marcos Jr. called for in his July 27, 2026 State of the Nation Address. Its centerpiece, House Bill No. 10345, was filed by House Speaker Faustino “Bojie” Dy III and Majority Leader Ferdinand Alexander “Sandro” Marcos to raise the personal income tax exemption ceiling from ₱250,000 to ₱350,000.

Would the ₱350,000 ceiling only help minimum and low-income earners? #

No. Because the proposal would raise the entire graduated tax table, not just the zero-tax floor, every bracket line above ₱350,000 would also shift upward. Workers earning well above ₱350,000 a year would still see lower withholding tax than they do today, even though they would not become fully tax-exempt.

What taxes might increase to pay for this exemption? #

The Department of Finance has proposed higher excise taxes on sweetened beverages, tobacco and vape products, alcohol, and single-use plastics, plus a wealth tax on ultra-high-net-worth individuals, to offset the revenue the government would forgo from a higher income tax exemption ceiling. None of these offsetting measures has been enacted as of September 2026 either.

When would the new ceiling take effect if the bill passes? #

News reports on the bill cite a proposed effectivity of January 1, 2027, contingent on the bill clearing both chambers of Congress and being signed by the President well before that date. Because the legislative timeline is not guaranteed, that date should be treated as the bill’s proposed target, not a confirmed effective date.

Should employers change their withholding tax computations now? #

No. Employers must keep withholding under the current table — Annex E of Revenue Regulations No. 11-2018, with the ₱250,000 annual exemption — until a new law is signed and the BIR issues implementing regulations and a revised withholding tax table. Changing withholding early, based on a bill that has not passed, would create under-withholding exposure.

Summary #

The Progress Bill’s proposed ₱350,000 income tax exemption ceiling is, as of September 12, 2026, a bill in Congress — not a law. House Bill No. 10345 has cleared one House committee; it has not passed the House floor, has not passed the Senate, and has not been signed. If it eventually becomes law, it would raise the exempt floor from ₱250,000 to ₱350,000 and shift the brackets above it, benefiting earners above the ceiling as well as those newly falling below it — funded, per the DOF’s proposal, by higher excise taxes on sweetened drinks, tobacco, alcohol, and plastics, plus a wealth tax. Until then, keep computing, withholding, and filing under the current ₱250,000 threshold in the TRAIN Law and RR No. 11-2018 — see How to Compute Withholding Tax on Compensation Using the BIR Withholding Tax Table for today’s actual rules.