Estate Tax and Tax Deduction under the TRAIN Law

Atty. Glenn Rey D. Anino

Benjamin Franklin once wrote: “In this world nothing can be said to be certain, except death and taxes.” In
Philippine setting, the legal consequences of death include tax liabilities upon passing one’s properties to
his/her heirs. In legal parlance, the properties left by a decedent are collectively called “estate,” hence the
estate tax.

Under the old law, the estate tax rates ranged from five percent (5%) to twenty percent (20%) of the net
estate. However, the Tax Reform for Acceleration and Inclusion (“TRAIN”), or Republic Act No. 10963
reduced the estate tax to a single rate of six percent (6%) of the net estate.

While the TRAIN law removes funeral expenses, judicial expenses and medical expenses as allowable
deductions, the said law however increases the Standard Deduction to five million (P5Million), which
previously only amounted to one million (P1Million).

Further, TRAIN law now provides that nonresident aliens can avail themselves of a standard deduction,
although only up to P500,000.

In addition, family homes that are worth up to P10 million will be exempted from estate tax. Previously, only
family homes worth P1 million are exempted.

Should you have any further question about wills and estate planning or if you need the Firm’s assistance,
please feel free to contact us at +63905-2870-464 or +63925-481-7804 or you can visit our office at Unit
2802 Cityland Pasong Tamo Tower, 2210 Chino Roces Avenue, Pio del Pilar, Makati City.