President Ferdinand Marcos Jr. announced tax relief measures and electricity cost reductions during his fifth State of the Nation Address at the House of Representatives on July 27, 2026. The proposals include raising the annual personal income tax exemption threshold from P250,000 to P350,000 and prohibiting power distributors from passing system loss charges to consumers. Marcos introduced these consumer-facing measures as inflation remains elevated and economic growth is expected to slow sharply in the Philippines.
Marcos Proposes Raising Income Tax Exemption to P350,000
Marcos proposed raising the annual personal income tax exemption threshold from the current P250,000 to P350,000. Senate President Win Gatchalian stated earlier that among the Senate's priorities is a bill to boost workers' take-home pay by raising the income tax exemption threshold to P400,000 annually while removing taxes on bonuses, overtime, holiday pay, night differentials, hazard pay, and service charges.
The President called for the abolition of the minimum corporate income tax for small businesses. The tax is imposed on gross income when it exceeds the regular corporate income tax, potentially requiring companies to pay even when their taxable profits are low.
Marcos pushed for an amnesty covering unpaid income, estate, donor's, and VAT liabilities. The President did not explain how much revenue the government could forgo or how the tax reductions would be reconciled with its deficit and debt targets.
President Calls for Immediate EPIRA Amendment on System Loss Charges
Marcos called for an "immediate amendment" to the Electric Power Industry Reform Act (EPIRA) to prohibit power distributors such as Meralco from passing system loss charges and the corresponding value-added taxes (VAT) on to consumers.
System loss refers to electricity lost during transmission and distribution, including technical losses from power lines and equipment and nontechnical losses such as theft and meter problems. Under EPIRA, a portion is currently recoverable from consumers, subject to regulatory caps.
"Hindi naman kasalanan ng consumer kung bakit nagkaroon ng system loss. Kaya hindi naman tama na kailangan sila pa ang pagbabayarin dito (Systems loss is not the fault of the consumer. So it's not right for them to have to pay for it)," Marcos said.
According to Meralco, system loss accounts for about 5% of a consumer's electricity bill. Congress and regulators would have to determine who ultimately absorbs the cost if the charge is removed.
Marcos said the government was monitoring almost 200 power projects with nearly 10,000 megawatts (MW) of capacity through 2028, plus more than 1,700 MW of energy-storage projects. He highlighted the discovery of an estimated 222 billion cubic feet of additional natural gas at Malampaya and said the resource could support continued production until 2034.
Government Cites P6 Trillion Investment Pipeline Through Green Lanes
Marcos said the Philippines now has 23 free trade agreements either in force or under negotiation, including a planned comprehensive economic partnership agreement with the United Arab Emirates.
He said more than P6 trillion in investments had been facilitated through the government's Green Lanes over the past three years, with the projects estimated to create more than 400,000 jobs. The amount represents investments endorsed or assisted through expedited processes and does not necessarily mean all projects have been constructed, funded, or started commercial operations.
Marcos credited banks and e-wallets for lowering or removing digital transaction fees, and cited loan-payment extensions offered during the crisis.
Marcos Does Not Address Inflation or Revised Growth Outlook
The President did not directly address inflation or explain the government's outlook for consumer prices. Headline inflation remained high at 6.4% in June, which is well above the government's target range of 2% to 4%.
There was no substantial discussion of economic growth, unemployment, wages, poverty, the fiscal deficit, public debt, or the peso. Marcos didn't mention the Philippines' new status as an upper-middle-income country. Days after achieving this milestone, the government's economic managers cut growth outlook to only 3.5% to 4.5% in 2026.
FAQ
What did President Marcos propose regarding personal income tax in his fifth SONA?
President Marcos proposed raising the annual personal income tax exemption threshold from the current P250,000 to P350,000. He also called for the abolition of the minimum corporate income tax for small businesses and pushed for an amnesty covering unpaid income, estate, donor's, and VAT liabilities.
Why did Marcos call for an amendment to EPIRA on electricity bills?
Marcos called for an immediate amendment to the Electric Power Industry Reform Act (EPIRA) to prohibit power distributors such as Meralco from passing system loss charges and the corresponding value-added taxes (VAT) on to consumers. He stated that system loss is not the fault of the consumer and it's not right for them to have to pay for it. According to Meralco, system loss accounts for about 5% of a consumer's electricity bill.
