Will the ₱250K Tax-Free Income Become ₱350K?
Many freelancers are asking whether the current ₱250,000 income tax exemption will increase to ₱350,000.
The answer is: there is a proposal to increase it, but it is not yet the law.
In July 2026, President Ferdinand Marcos Jr. called on Congress to increase the annual income tax exemption threshold from ₱250,000 to ₱350,000. Several bills were subsequently filed in Congress to implement the proposed increase.
For now, freelancers should continue following the current tax rules. Do not automatically treat ₱350,000 as the new tax-free threshold until the proposed legislation is officially enacted and takes effect.
What Is the ₱250,000 Tax-Free Threshold?
Under the current individual income tax system, the first ₱250,000 of taxable income is subject to a 0% income tax rate under the graduated income tax table.
This is an important distinction for freelancers.
The ₱250,000 threshold is not simply a blanket exemption from all taxes on your gross freelance receipts.
How the threshold applies depends on your income tax regime and how your taxable income is determined.
For freelancers using the graduated income tax rates, allowable deductions can affect taxable income.
For freelancers using the 8% income tax option, the computation works differently.
Why Is ₱350,000 Being Proposed?
The proposed increase is intended to provide additional tax relief to individual taxpayers.
President Marcos included the proposed increase in his 2026 State of the Nation Address. The proposal would increase the annual income tax exemption ceiling from ₱250,000 to ₱350,000.
The Department of Finance said the proposed change could benefit millions of Filipino workers by allowing more income to remain exempt from personal income tax.
The proposed increase would give taxpayers more room before their taxable income becomes subject to income tax under the applicable graduated rates.
Is the ₱350,000 Tax-Free Income Already Effective?
No.
This is the most important point for freelancers.
As of September 2026, the ₱350,000 threshold is still part of proposed legislation.
The House Committee on Ways and Means approved a measure that would raise the annual taxable income exemption ceiling to ₱350,000 from ₱250,000. However, congressional approval of a bill does not by itself mean that the new threshold is already in effect.
The Senate also has a proposal. Senate Bill No. 2338, filed in July 2026, seeks to allow individuals earning up to ₱350,000 annually to remain exempt from income tax beginning January 1, 2027, if the measure becomes law.
Therefore, freelancers should wait for the legislative process to be completed and for the final law and effectivity rules to be issued.
How Would ₱350,000 Affect Freelancers?
If the proposal becomes law in the form currently being discussed, the higher threshold could reduce income tax for some freelancers using the graduated income tax rates.
For example, a freelancer with taxable income of ₱300,000 could potentially benefit because the proposed threshold would cover the entire amount.
Under the current ₱250,000 threshold, however, the amount above ₱250,000 falls into the next applicable tax bracket under the graduated rates.
The actual tax calculation can still depend on the final law and any corresponding changes to the tax brackets.
What About Freelancers Using the 8% Tax Option?
This is where freelancers need to be careful.
The proposed ₱350,000 exemption should not automatically be interpreted as meaning that all freelancers can simply deduct ₱350,000 from their gross receipts under the 8% tax option.
The 8% tax option follows its own computation rules.
Under the current rules, qualified self-employed individuals who choose the 8% income tax rate generally calculate the tax based on gross sales or receipts in excess of the applicable ₱250,000 threshold.
The treatment of the threshold under the 8% option is therefore different from simply applying the graduated income tax table.
If the law changes, the BIR may also issue implementing guidance explaining how the new threshold will apply to taxpayers using the 8% option.
Does ₱350,000 Mean Freelancers Will Pay Zero Tax?
Not necessarily.
This is another common misunderstanding.
A proposed ₱350,000 income tax exemption refers to income tax. It does not automatically mean that a freelancer with ₱350,000 in gross receipts will have no tax obligations at all.
A freelancer may have other tax responsibilities depending on their registration and tax option.
These can include other applicable taxes, filing requirements, and compliance obligations.
The final treatment will depend on the law and BIR implementing rules.
When Could the ₱350,000 Threshold Take Effect?
One Senate proposal seeks to make the change effective January 1, 2027.
However, the proposed effective date should not be treated as final until the legislation is enacted.
The House has also considered several bills proposing a ₱350,000 annual income tax exemption threshold. These bills were still pending through the legislative process at the time of the latest available congressional records.
The final law could contain different provisions, rates, or effectivity dates.
What Should Freelancers Do Right Now?
1. Continue Using the Current Rules
Until a new law takes effect, continue using the current ₱250,000 threshold where applicable.
Do not change your tax computation simply because the ₱350,000 proposal has been announced.
2. Do Not Change Your Tax Option Yet
If you currently use the 8% income tax option, do not change your election based only on the proposed increase.
The 8% option has its own rules and eligibility requirements.
3. Keep Your Income Records
Continue tracking your actual freelance income.
Keep invoices, receipts, bank records, payment-platform records, and other supporting documents.
Good records will remain important regardless of whether the exemption threshold changes.
4. Watch for the Final Law
A proposal can change during the legislative process.
The final version may not be exactly the same as the original bill.
Freelancers should wait for the final law and the BIR’s implementing guidance before changing their tax compliance practices.
Tips for Freelancers
Do Not Treat News as Tax Law
A proposed bill is not the same as an enacted law.
Always check whether the measure has actually become effective before using a new tax threshold in your return.
Know the Difference Between Gross and Taxable Income
The ₱250,000 or proposed ₱350,000 threshold should not be confused with a simple monthly income allowance.
How it applies depends on your tax regime.
Avoid Premature Tax Adjustments
Do not intentionally report less taxable income because you expect the exemption to increase.
Your tax return should follow the rules that are effective for the taxable period you are reporting.
Check Official Updates
Tax rules can change quickly.
Check official BIR and government announcements before filing your tax return.
Will the ₱250,000 tax-free income threshold increase to ₱350,000?
There is a strong legislative push to make it happen.
The President has proposed increasing the annual income tax exemption threshold to ₱350,000. Congress has also considered and approved measures advancing the proposal.
However, the ₱350,000 threshold should not yet be treated as current law until the legislation is officially enacted and takes effect.
For now, freelancers should continue following the existing tax rules and the current ₱250,000 threshold where applicable.
If the proposal becomes law, the BIR should provide further guidance on how the new threshold will apply to freelancers, including those using the 8% income tax option.
Stay updated before changing your tax computation.
👉 Follow us on our socials for more high-paying, effective freelancing and tax tips. (TikTok, YouTube, Facebook, and Instagram) and read our blogs for more tax tips designed for freelancers!
Ready to make tax filing easy? Download our Ultimate DIY BIR Tax Compliance Guide, try our Freelancer Income Tax Calculator, and schedule your Free Tax Consultation Call to take the next step toward confident, stress-free tax filing!