HOUSE BILL NO. 6205

Introduced by KAMANGGAGAWA Partylist

Representative ELIJAH R. SAN FERNANDO

AN ACT DECLARING A THREE-MONTH EXEMPTION OF COMPENSATION INCOME FROM INCOME TAX

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. – This Act shall be known as the “Three-Month Tax Holiday Act of 2025.”

SEC. 2. Declaration of Policy. – It is hereby declared the policy of the State to safeguard the welfare of the Filipino people by ensuring the tax system is fair, responsive, and aligned with the highest standards of public accountability. In recognition of the need to reinforce public confidence in fiscal governance and to respond to extraordinary disruptions in the integrity of public spending, the State shall implement exceptional and time-bound measures that provide relief to taxpayers while strengthening the principles of fairness and responsible public finance. To this end, the State shall extend a one-time, three-month tax holiday on compensation income as a measure of immediate relief and as a reaffirmation of the people’s central role in national development.

SEC. 3. Three-Month Tax Holiday on Compensation Income. – Notwithstanding any provision of the National Internal Revenue Code of 1997, as amended, and other applicable laws, rules, and regulations, there is hereby granted a one-time, three-month income tax holiday applicable to individual taxpayers receiving compensation income.

For the duration of the designated tax holiday month:
(a) All compensation income shall be exempt from income tax;
(b) The exemption shall apply exclusively to individual taxpayers receiving compensation income: Provided, That in the case of mixed income earners, only that portion of income classified as compensation income shall be exempt under this Act;
(c) Employers shall not withhold or remit income taxes for said period; and
(d) No penalties shall be imposed on either employers or employees for the suspension of tax withholding during the tax holiday.

SEC. 4. Non-Diminution of Benefits. – Nothing in this Act shall authorize any employer, whether public or private, to reduce, defer, withhold, or otherwise diminish the compensation, allowances, or benefits of employees during the tax holiday month.

SEC. 5. Authorized Deductions. – The tax holiday granted under this Act shall not cover deductions pertaining to:
(a) Mandatory contributions to the Government Service Insurance System (GSIS), Social Security System (SSS), PhilHealth, and Home Development Mutual Fund (HDMF) also known as PAGIBIG Fund; and
(b) Loan amortizations or other payments voluntarily authorized in writing by the employee.

SEC. 6. Period of Implementation. – The three-month tax holiday shall take effect on the first payroll month immediately following the approval of this Act. It shall be availed of only once during the taxable year and shall not be carried over in subsequent taxable years.

SEC. 7. Uniform Application. – To ensure equity and fairness, the tax exemption granted under this Act shall apply uniformly to all individual taxpayers receiving compensation income, regardless of sector, employer type, or compensation level, for income earned from sources within the Philippines.

SEC. 8. Transparency and Accountability. – The Department of Finance (DOF) through the Bureau of Internal Revenue (BIR) shall submit to Congress, within sixty (60) days after implementation, a report detailing the foregone revenue, the number of taxpayers who benefited, and measures undertaken to ensure compliance with this Act. Employers shall maintain records of compensation from which taxes were exempted and make such records available for audit.

Read the full HOUSE BILL NO. 6205 here!

Source: https://www.facebook.com/photo?fbid=1303457875155758&set=pcb.1303458118489067