Senatorial aspirant and Makati City Mayor Abby Binay is pushing for amendments to the tax code that would exempt overtime pay and bonuses, such as the 13th month pay, from income tax, in a bid to ease the financial burden on Filipino workers and boost family welfare.

In a statement, Binay vowed to pursue legislation in the Senate that would reclassify these forms of compensation as non-taxable income, arguing that current policies do not reflect the economic realities faced by many Filipinos.

“Exempting minimum wage earners from income tax is not enough. Moreover, the current non-taxable income rates are no longer realistic given the present economic conditions in the country,” she said.

Under the current "Tax Reform for Acceleration and Inclusion (TRAIN) Law" or Republic Act No. 10963, individuals earning up to P250,000 annually are exempt from income tax. The law also provides tax exemption for 13th-month pay and other bonuses up to P90,000. Any excess is included in the computation of taxable income.

Binay argued that these provisions are no longer sufficient in addressing workers' needs amid high inflation and rising costs of living.

“Workers deserve to enjoy their overtime pay and bonuses in full. It is but fair to fully compensate their hard work and extended hours of working which cut into their supposed rest period and family time,” she added.

She emphasized that excluding overtime pay from taxable income would directly increase workers’ take-home pay, providing them with more disposable income for essentials such as food, utilities, and transportation.

“If they receive their OT pay in full, they will have more disposable income to spend for the basic needs of their families like food, clothing, shelter, water, and electricity,” Binay said.

She also pointed out that full exemption of bonuses would allow Filipino families to better enjoy the holiday season.

“Mas magiging masaya ang Pasko para sa bawat pamilyang Pilipino kapag buong-buong natatanggap ang mga year-end bonus,” she said. “Malamang ay makakabayad din sila kahit papaano sa mga utang, at magiging mas masaya ang pagsalubong nila sa Bagong Taon.”

(“Christmas will be happier for every Filipino family if they receive their year-end bonuses in full.” “They might even be able to pay off some of their debts, and they’ll welcome the New Year with greater joy.”)

Binay noted that the measure could even benefit the government by driving consumer spending and boosting overall economic activity.

“Mababawi rin ang nabawasang kita ng gobyerno mula sa buwis dahil mas lalakas ang purchasing power ng mga mamamayan,” she said.

(“The government’s lost tax revenue can be recovered because people’s purchasing power will increase.”)

To supplement any lost revenue, Binay proposed further investment in tourism and other sectors with untapped potential.

“We have so many resources yet to be fully tapped for revenue generation. Let us focus on them so that over 50 million Filipino workers, including minimum wage earners and ordinary employees, will not have to bear onerous taxes and be able to provide a decent life for their families,” she added.