Republic Act No. 9504· Enacted 2008-06-17

Minimum Wage Earner Tax Exemption (RA 9504) — BatasKo ELI5

RA 9504 exempts minimum wage earners from income tax in the Philippines. No income tax, no tax return required, and holiday pay is also exempt. Know your rights.

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Ang Batas sa Madaling Salita— ELI5

RA 9504, signed in 2008, amended the National Internal Revenue Code to exempt minimum wage earners from paying income tax. If you earn exactly the minimum wage set by your region's wage board, you pay zero income tax — and your holiday pay, overtime, night differential, and hazard pay are also tax-free. You don't even need to file an income tax return.

Official text — Republic Act No. 9504

Jump to section ↓10 sections

Preamble — Fourteenth Congress
Section 22 — of Republic Act No. 8424, as amended, otherwise
Section 24 — (A) of Republic Act No. 8424, as amended, other
Section 34 — (L) of Republic Act No. 8424, as amended, other
Section 35 — (A) and (B) of Republic Act No. 8424, as amende
Section 51 — (A)(2) of Republic Act No, 8424, as amended, ot
Section 79 — (A) of Republic Act No. 8424, as amended, other
SEC. 7 — Separability Clause.
SEC. 8 — Repealing Clause.
SEC. 9 — Effectivity Clause.

Preamble

Fourteenth Congress

First Regular Session

Begun and held in Metro Manila, on Monday, the twenty-third day of July, two thousand seven.

REPUBLIC ACT No. 9504 June 17, 2008

Amending

RA 8424

AN ACT AMENDING SECTION 22, 24, 34, 35, 51, AND 79 OF REPUBLIC ACT NO. 8424, AS AMENDED OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE OF 1997

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

Section 22 — of Republic Act No. 8424, as amended, otherwise known as the National Internal Revenue Code of 1997, is hereby further amended by adding the following definition after Subsection (FF) to read as follows:

Section 22 of Republic Act No. 8424, as amended, otherwise known as the National Internal Revenue Code of 1997, is hereby further amended by adding the following definition after Subsection (FF) to read as follows:

"SEC. 22.

Definitions.

- when used in this Title:

"(A) x x x.

"x x x

"(FF) x x x.

"(GG) the term 'statutory minimum wage' earner shall refer to rate fixed by the Regional Tripartite Wage and Productivity Board, as defined by the Bureau of Labor and Employment Statistics (BLES) of the Department of Labor and Employment (DOLE)

"(HH) the term 'minimum wage earner' shall refer to a worker in the private sector paid the statutory minimum wage, or to an employee in the public sector with compensation income of not more than the statutory minimum wage in the non-agricultural sector where he/she is assigned."

Section 24 — (A) of Republic Act No. 8424, as amended, otherwise known as the National Internal Revenue Code of 1997, is hereby further amended to read as follows:

Section 24(A) of Republic Act No. 8424, as amended, otherwise known as the National Internal Revenue Code of 1997, is hereby further amended to read as follows:

"SEC. 24.

Income Tax Rates.

"(A)

Rates of Income Tax on Individual Citizen and Individual Resident Alien of the Philippines.

"(1) x x x:

"x x x; and

"(c) On the taxable income defined in Section 31 of this code, other than income subject to tax under Subsections (B), (C) and (D) of this Section, derived for each taxable year from all sources within the Philippines by an individual alien who is a resident of the Philippines.

"(2) Rates of Tax on Taxable Income of Individuals. - The tax shall be computed in accordance with and at the rates established in the following schedule:

"Not over P10,000

........

"Over P10,000 but not over P30,000

........

P500+10% of the excess over P10,000

"Over P30,000 but not over P70,000

........

P2,500+15% of the excess over P30,000

"Over P70,000 but not over P140,000

........

P8,500+20% of the excess over P70,000

"Over P140,000 but not over P250,000

........

P22,500+25% of the excess over P140,000

"Over P250,000 but not over P500,000

........

P50,000+30% of the excess over P250,000

"Over P5000,000

........

P125,000+32% of the excess over P500,000

"For married individuals, the husband and wife, subject to the provision of Section 51 (D) hereof, shall compute separately their individual income tax based on their respective total taxable income:

Provided

, that if any income cannot be definitely attributed to or identified as income exclusively earned or realized by either of the spouses, the same shall be divided equally between the spouses for the purpose of determining their respective taxable income.

Provided

, That minimum wage earners as defined in Section 22 (HH) of this Code shall be exempt from the payment of income tax on their taxable income:

Provided

further

, That the holiday pay, overtime pay, night shift differential pay and hazard pay received by such minimum wage earners shall likewise be exempt from income tax.

"x x x."

Section 34 — (L) of Republic Act No. 8424, as amended, otherwise known as the National Int→

Section 34(L) of Republic Act No. 8424, as amended, otherwise known as the National Internal Revenue Code of 1997, is hereby amended to read as follows:

"SEC. 34.

Deductions from Gross Income.

- Except for taxpayers earning compensation income arising from personal services rendered under an employer-employee relationship where no deductions shall be allowed under this Section other than under Subsection (M)hereof, in computing taxable income subject to income tax under Sections 24(A); 25(A); 26; 27(A), (B), (C); and 28(A)(1), there shall be allowed the following deductions from the gross income:

"(A)

Expenses.

"x x x.

"(L)

Optional Standard Deduction.

- In lieu of the deductions allowed under the preceding Subsections, an individual subject to tax under Section 24, other than a nonresident alien, may elect a standard deduction in an amount not exceeding forty percent (40%) of his gross sales or gross receipts, as the case may be. In the case of a corporation subject to tax under section 27(A) and 28(A)(1), it may elect a standard deduction in an amount not exceeding forty percent (40%) of it gross income as defined in Section 32 of this Code. Unless the taxpayer signifies in his return his intention to elect the optional standard deduction, he shall be considered as having availed himself of the deductions allowed in the preceding Subsections. Such election when made in the return shall be irrevocable for the taxable year for which the return is made:

Provided

, That an individual who is entitled to and claimed for the optional standard shall not be required to submit with his tax return such financial statements otherwise required under this Code:

Provided

further

, That except when the Commissioner otherwise permits, the said individual shall keep such records pertaining to his gross sales or gross receipts, or the said corporation shall keep such records pertaining to his gross income as defined in Section 32 of this Code during the taxable year, as may be required by the rules and regulations promulgated by the Secretary of Finance, upon recommendation of the Commissioner.

"(M) x x x."

"x x x."

Section 35 — (A) and (B) of Republic Act No. 8424, as amended, otherwise known as the Nati→

Section 35(A) and (B) of Republic Act No. 8424, as amended, otherwise known as the National Internal Revenue Code of 1997, is hereby amended to read as follows:

"SEC. 35.

Allowance of Personal Exemption for Individual Taxpayer.

"(A)

In General.

- For purposes of determining the tax provided in Section 24(A) of this title, there shall be allowed a basic personal exemption amounting to Fifty thousand pesos (P50,000) for each individual taxpayer.

"In the case of married individual where only one of the spouses is deriving gross income, only such spouse shall be allowed the personal exemption.

"(B)

Additional Exemption for Dependents.

- There shall be allowed an additional exemption of Twenty-five thousand pesos (25,000) for each dependent not exceeding four (4).

"The additional exemption for dependents shall be claimed by only one of the spouses in the case of married individuals.

"In the case of legally separated spouses, additional exemptions may be claimed only by the spouse who has custody of the child or children:

Provided

, That the total amount of additional exemptions that may be claimed by both shall not exceed the maximum additional exemptions herein allowed.

"For purposes of this Subsection, a "dependent" means a legitimate, illegitimate or legally adopted child chiefly dependent upon and living with the taxpayer if such dependent is not more than twenty-one (21) years of age, unmarried and not gainfully employed or if such dependent, regardless of age, is incapable of self-support because of mental or physical defect.

"x x x."

Section 51 — (A)(2) of Republic Act No, 8424, as amended, otherwise known as the National →

Section 51 (A)(2) of Republic Act No, 8424, as amended, otherwise known as the National Internal revenue Code of 1997, is hereby further amended to read as follows:

"SEC. 51.

Individual Return.

"(A)

Requirements.

"(1) Except as provided in paragraph (2) of this Subsection, the following individuals are required to file an income tax return:

"(a) x x x;

"x x x.

"(2) The following individuals shall not be required to file an income tax return:

"(a) x x x;

"(b) An individual with respect to pure compensation income, as defined in Section 32(A)(1), derived from such sources within the Philippines, the income tax on which has been correctly withheld under the provisions of Section 79 of this Code:

Provided

, That an individual deriving compensation concurrently from two or more employers at any time during the taxable year shall file an income tax return;

"(c) x x x; and

"(d) A minimum wage earner as defined in Section 22(HH) of this Code or an individual who is exempt from income tax pursuant to the provisions of this Code and other laws, general or special.

"x x x."

Section 79 — (A) of Republic Act No. 8424, as amended, otherwise known as the National Int→

Section 79(A) of Republic Act No. 8424, as amended, otherwise known as the National Internal Revenue Code of 1997, is hereby further amended to read as follows:

"Section 79.

Income Tax Collected at Source.

"(A)

Requirement of Withholding.

- Except in the case of a minimum wage earner as defined in Section 22(HH) of this code, every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner:

"x x x."

Show 3 more sections +→

SEC. 7 — Separability Clause.→

SEC. 7.

Separability Clause.

- If any provision of this Act is declared invalid or unconstitutional, other provisions hereof which are not affected thereby shall continue to be in full force and effect.

SEC. 8 — Repealing Clause.→

SEC. 8.

Repealing Clause.

- Any law, presidential decree or issuance, executive order, letter of instruction, administrative order, rule or regulation contrary to or inconsistent with any provision of this Act as hereby amended or modified accordingly.

SEC. 9 — Effectivity Clause.→

SEC. 9.

Effectivity Clause.

- This Act shall take fifteen (15) days following its publication in the

official Gazette

or in at least two (2) newspaper of general circulation.

Approved,

(Sgd.)

PROSPERO C. NOGRALES

Speaker of the House of Representatives

(Sgd.)

MANNY VILLAR

President of the Senate

This Act which is a consolidation of House Bill 3971 and Senate Bill No. 2293 was finally passed by the House of Representatives and the Senate on May 28, 2008 and May 27, 2008 respectively.

(Sgd.)

MARILYN B. BARUA-YAP

Secretary General

House of Represenatives

(Sgd.)

EMMA LIRIO-REYES

Secretary of Senate

Approved:

June 17, 2008

(Sgd.)

GLORIA MACAPAGAL-ARROYO

President of the Philippines

The Lawphil Project - Arellano Law Foundation

Full text on BatasKo. Original source: Official Gazette / Lawphil.

Tinanggal sa sweldo mo ang income tax. Tumawag ka sa HR: "Minimum wage ka, di ba? Kailangan pa rin." Mali sila. Mula nang maisabatas ang RA 9504 noong 2008, minimum wage earners are legally tax-exempt. Ibabalik namin ang pera mo.

ELI5: If you earn exactly the minimum wage for your region (as set by the Regional Tripartite Wage and Productivity Board), you pay zero income tax. Your holiday pay, overtime, night shift differential, and hazard pay are also completely tax-free. You do not need to file an income tax return with the BIR. Your employer should not be withholding income tax from your paycheck.

Real Filipino Scenario

Maria, a 26-year-old factory worker in Cavite, earns exactly the minimum wage for Region IV-A. Her employer has been deducting income tax from her payslip for two years — totaling around ₱12,000.

Maria did not know she was exempt under RA 9504.

When she found out, she went to her HR department with a printout of RA 9504. The company reviewed their payroll system, admitted the error, and refunded her the wrongly withheld taxes.

Maria then filed for a tax refund for the prior years with the BIR using BIR Form 1700. // TODO: verify current BIR refund process for minimum wage earners

What the Law Actually Says

RA 9504 amended six sections of the National Internal Revenue Code (RA 8424). The most important changes:

New Definitions (Section 1 of RA 9504 amending NIRC Section 22):

Statutory Minimum Wage — the rate fixed by the Regional Tripartite Wage and Productivity Board (RTWPB), as defined by the Bureau of Labor and Employment Statistics (BLES) of DOLE.
Minimum Wage Earner — a private sector worker paid the statutory minimum wage, OR a public sector employee whose compensation does not exceed the minimum wage in the non-agricultural sector of their assigned area.

Tax Exemption (amending NIRC Section 24[A]):

"Minimum wage earners as defined in Section 22(HH) of this Code shall be exempt from the payment of income tax on their taxable income: Provided, further, That the holiday pay, overtime pay, night shift differential pay and hazard pay received by such minimum wage earners shall likewise be exempt from income tax."

This means four types of additional pay are also tax-free for minimum wage earners:

Holiday pay
Overtime pay
Night shift differential
Hazard pay

No Tax Return Required (amending NIRC Section 51[A][2][d]):

Minimum wage earners are explicitly listed among those not required to file an income tax return. You do not need to submit BIR Form 1700.

No Withholding at Source (amending NIRC Section 79[A]):

Employers are prohibited from withholding income tax from minimum wage earners. The law now says: "Except in the case of a minimum wage earner... every employer making payment of wages shall deduct and withhold..."

Higher Personal Exemptions for Everyone (amending NIRC Section 35):

RA 9504 also raised personal exemptions:

Basic personal exemption: ₱50,000 per individual taxpayer
Additional exemption per dependent: ₱25,000 (maximum of 4 dependents)

Note: These exemption amounts were superseded by the TRAIN Law (RA 10963) in 2018, which introduced a different tax structure. The minimum wage exemption itself remains in force.

Optional Standard Deduction raised to 40% (amending NIRC Section 34[L]):

Individual taxpayers and corporations may now use an Optional Standard Deduction of up to 40% of gross sales/receipts instead of itemized deductions. This benefits self-employed individuals and small business owners.

What This Means for You

If you are a minimum wage earner:

Your employer cannot legally deduct income tax from your pay.
Your holiday pay, overtime, night shift differential, and hazard pay are all tax-free.
You do not need to file an annual income tax return with the BIR.
If your employer has been withholding income tax incorrectly, you can claim a refund.

The exemption applies to the minimum wage rate in your specific region. If you earn more than the minimum wage — even by ₱1 — you are no longer fully exempt. You would pay income tax only on the portion above the minimum wage.

What Most Filipinos Get Wrong

"Lahat ng mahirap na Pilipino ay exempt sa income tax." No. The exemption is specifically for workers earning exactly the statutory minimum wage. Someone earning slightly above minimum wage is taxable on the excess.

"Ang overtime pay ko ay may income tax." Not if you are a minimum wage earner. RA 9504 explicitly exempts holiday pay, overtime, night differential, and hazard pay for minimum wage earners.

"Kailangan ko pa ring mag-file ng ITR para maiwasan ang multa." No. Section 51 of the NIRC as amended by RA 9504 specifically excludes minimum wage earners from the ITR filing requirement.

"Applicable pa rin ito kahit may TRAIN Law na." Yes. The TRAIN Law (RA 10963, 2018) changed the tax brackets and exemptions for other taxpayers, but the minimum wage earner exemption under RA 9504 was retained and actually strengthened — employees earning up to ₱250,000 annually are now also exempt under TRAIN, covering many workers above minimum wage as well. // TODO: verify current income tax exemption threshold under TRAIN Law

For OFWs / Para sa OFW

RA 9504 is relevant to OFWs in two direct ways:

1. OFWs who worked in the Philippines before deployment: If you were a minimum wage earner before becoming an OFW, your employer should not have been withholding income tax. You can still claim refunds for prior years if taxes were incorrectly withheld, subject to the 2-year prescriptive period for tax refunds.

2. Returning OFWs re-entering the local workforce: When you come back and take a job at minimum wage in the Philippines, RA 9504's exemption applies to you immediately. Make sure your employer updates their payroll system — some HR departments still incorrectly withhold income tax from minimum wage earners.

3. Income of OFWs from their overseas employment: This is a separate matter. OFW income from overseas employment is generally exempt from Philippine income tax under Section 23 of the NIRC. RA 9504 is about Philippine-based minimum wage earners, not overseas income.

If you are an OFW and have a family member working in the Philippines at minimum wage, share this information with them. It could mean thousands of pesos wrongly deducted returned to them.

What to Do If Your Rights Are Violated

If your employer is deducting income tax from your minimum wage:

Confirm your minimum wage rate. Check the current minimum wage order for your region at the DOLE website (dole.gov.ph) or your nearest DOLE Regional Office. The rate differs by region and industry.
Present RA 9504 to your HR or payroll department. Show them Section 24(A) of the NIRC as amended, which explicitly states the exemption.
Request a refund of over-withheld taxes. Ask HR to correct the withholding and refund the excess. If they have already remitted it to the BIR, you can file for a tax refund with BIR Form 1700 or 1701, attaching proof of minimum wage status.
File a complaint with the BIR. If your employer refuses to correct the error, contact the BIR district office where your employer is registered. The BIR can audit the employer's withholding tax compliance.
File a labor complaint with DOLE. Improper wage deductions also violate the Labor Code. File at the nearest DOLE Regional Office or through the SEnA (Single Entry Approach) mediation program.

Related Laws

FAQs

Q: Paano ko malalaman kung minimum wage earner ba ako ayon sa batas? A: Ang minimum wage ay nag-iiba depende sa rehiyon at industriya. Hanapin ang pinakabagong Wage Order para sa iyong rehiyon sa dole.gov.ph o sa RTWPB (Regional Tripartite Wage and Productivity Board) ng inyong lugar. Kung ang iyong basic pay ay exactly equal to that rate, ikaw ay minimum wage earner.

Q: Exempt din ba ang 13th month pay ng minimum wage earner? A: The 13th month pay of minimum wage earners is exempt from income tax under PD 851 and the NIRC. The first ₱90,000 of 13th month pay and other benefits is tax-exempt for all employees under the TRAIN Law. // TODO: verify current 13th month pay exemption ceiling

Q: Kung dalawa ang employer ko at parehong minimum wage — exempt pa rin ba ako? A: No. If you have two employers at the same time, you are required to file an income tax return regardless of your wage level, per Section 51(A)(2)(b) of the NIRC as amended by RA 9504.

Sources

Republic Act No. 9504, "An Act Amending Sections 22, 24, 34, 35, 51, and 79 of the National Internal Revenue Code of 1997," approved June 17, 2008. https://lawphil.net/statutes/repacts/ra2008/ra_9504_2008.html

General information only. Not legal advice. For specific tax concerns, consult the Bureau of Internal Revenue (BIR) at bir.gov.ph or the Public Attorney's Office (PAO) at 1-800-10-PAO-8888.

By Irvin Abarca & Claude (AI Research Partner) · Published May 2026 · 7 min read

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Legal disclaimer: BatasKo provides general legal information, not legal advice. For your specific situation, consult a licensed Filipino lawyer or the Public Attorney's Office (PAO).

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