Our tax laws are significantly evolving. I had said this before and I would say this once again. Many tax laws have been passed in the previous years, and we expect further changes and developments in taxation, with a number of tax bills pending in Congress. One of these proposals is the GINHAWA Bill (S.B. 56), which was filed in July of 2025. The GINHAWA Bill is short for ‘Granting Increase in Take-Home Pay for All Working Filipinos Act.’
Among the features of this bill are mentioned here. The GINHAWA Bill proposes to increase the amount of income of individual taxpayers that is exempt from income tax, from the present P250,000 to P400,000, while still keeping the same graduated income tax rates of 0 percent to 35 percent. The amount of tax-exempt 13th month pay, bonuses and other benefits would also be increased from P90,000 to P150,000.
The proposed measure also intends to exclude as part of the taxable income any additional compensation required to be paid to employees under the Labor Code of the Philippines -such as holiday pay, overtime pay, night shift differential pay, hazard pay, and service charges. Exclusion of overtime pay shall, however, be limited to P100,000 only. While the graduated income tax rates are kept, the tax rate on employee fringe benefits would no longer be fixed at 35 percent. Under the bill, fringe benefits would be subjected to the same graduated tax rates, depending on the amount of income of the taxpayer, regardless of the position of the employee. Life or health insurance and other non-life insurance premiums borne by the employer for its employees shall no longer be considered taxable fringe benefits. That means life and health insurance costs of employees borne by the employer shall not be considered taxable benefits.
In the GINHAWA Bill, minimum wage earners remain exempt from the payment of tax on their income. But, here, not only their basic pay, holiday pay, overtime pay, night shift differential pay, and hazard pay would be exempt, but also their share in service charges.
Other than the proposed changes for individual taxpayers, there are also proposed changes that may affect small businesses. There is a proposal to allow 50 percent additional deduction for the labor expenses paid to the employees of micro taxpayers. They will also be exempted from the coverage of creditable withholding tax obligations on their purchases. True to its name, the bill seeks to improve the level of disposable income and cost of living of individual taxpayers, especially employees, by enhancing deductions, exemptions and exclusions from their taxable income, and thereby lowering the total amount of taxes they need to pay. The bill likewise advances the benefits that may be indirectly enjoyed by them by cutting down on the passed-on taxes. These provide the taxpayers sort of relief from the burden of taxation and the daily costs of living. I hope Congress will consider this.