Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 1868)
Presidential Decree No. 1868 grants special additional personal exemptions to individual taxpayers under certain conditions, primarily aimed at assisting low-salaried employees by providing additional relief to meet the increasing costs of living.
Single individuals or those judicially decreed as legally separated from their spouse are allowed a basic personal exemption of Three Thousand Pesos (P3,000.00). If their gross compensation income does not exceed Twenty Thousand Pesos (P20,000.00), they are allowed an additional special exemption of Four Thousand Pesos (P4,000.00).
Married individuals are allowed a basic personal exemption of Six Thousand Pesos (P6,000.00). Heads of family are allowed a basic personal exemption of Four Thousand Five Hundred Pesos (P4,500.00). If the gross compensation income does not exceed Twenty Thousand Pesos (P20,000.00), a special additional exemption of Four Thousand Pesos (P4,000.00) is allowed.
A 'head of family' means an unmarried man or woman with one or both parents, or with one or more brothers, sisters, or legitimate, recognized natural, or adopted children living with and dependent upon them for chief support, provided these dependents are not gainfully employed or are incapable of self-support due to mental or physical defects.
An additional exemption of Two Thousand Pesos (P2,000.00) is allowed for each legitimate, recognized natural, or adopted child wholly dependent upon and living with the taxpayer, provided they are not more than 21 years old, unmarried, and not gainfully employed, or incapable of self-support due to mental or physical defects. This exemption is allowed only if the taxpayer is married or a head of family.
The total number of dependents for which additional exemptions may be claimed shall not exceed four dependents.
Yes, an additional exemption of One Thousand Pesos (P1,000.00) is allowed for each child who qualified as a dependent prior to January 1, 1980.
The amount of personal and additional exemptions granted shall be first deducted from the gross compensation income. Any excess of the basic personal exemption and additional exemption for dependents shall then be deducted from other income.
PD No. 1868 took effect immediately upon its approval on July 6, 1983, and covers compensation income earned in the calendar year 1983.