Here’s a plain-English, everything-you-need legal explainer on Income Tax “Exemption” for Persons with Disabilities (PWDs) in the Philippines—written to be practical for employees, self-employed PWDs, parents/guardians (“benefactors”), HR/payroll, and employers. No web lookups used.

Income Tax Exemption for PWDs (Philippines): What’s Really Covered

1) First principles (the big picture)

Core laws: the Magna Carta for Persons with Disability (RA 7277) as amended (including RA 10754) and the National Internal Revenue Code (NIRC) as amended (notably by the TRAIN Law / RA 10963).
Key truth: There is no blanket income-tax exemption simply for being a PWD. Tax relief for PWDs is mostly on the spending side (20% discount + VAT exemption on qualified purchases) and on the employer side (income-tax incentives for hiring PWDs).
What changed under TRAIN (effective 1 Jan 2018): Personal and additional exemptions in the NIRC were removed. So the old idea of claiming a PWD dependent as an “additional tax exemption” for the benefactor no longer applies under the current income-tax computation.

Translation: If you earn taxable income, you’re generally taxed like everyone else under the current brackets—unless a separate rule specifically exempts that income (e.g., minimum wage earner rules, 13th-month cap, SSS/GSIS benefits). Being a PWD, by itself, doesn’t zero out income tax.

2) Who is a “PWD” for legal/tax purposes?

A Philippine PWD ID holder (issued by the LGU through the PDAO/City/Municipal Social Welfare Office).
The ID (and purchase booklet/authorization, when applicable) is what unlocks VAT exemption and 20% discount on covered goods/services.
For employer tax incentives, the employee’s PWD ID and employment documentation are essential proof.

3) What income is actually tax-exempt for a PWD?

Exactly the same categories that are tax-exempt for non-PWDs, plus any specific PWD-related incentives where applicable:

Minimum Wage Earner (MWE) rule. If a PWD is legally classified as an MWE, their basic minimum wage, holiday pay, overtime, night shift differential, and hazard pay are exempt from income tax. (This exemption flows from the NIRC, not from PWD status.)
13th-month & other benefits up to the statutory non-taxable ceiling (currently provided by law—HR/payroll should track the prevailing cap). Amounts beyond the cap are taxable.
Statutory benefit exclusions that apply to everyone (e.g., SSS/GSIS, Pag-IBIG, certain de minimis benefits, separation benefits under specific conditions, etc.).
Scholarships/grants that meet NIRC rules for exclusion from gross income (applies to all qualified recipients).

Important: There is no general rule that makes a PWD’s salary or business income tax-exempt solely due to disability.

4) Do benefactors (parents, spouse, guardians) get an income-tax break?

Before TRAIN: “Additional exemptions” for dependents were a thing; RA 10754 allowed a qualified PWD dependent to be claimed regardless of age (subject to dependency criteria).
After TRAIN: Personal/additional exemptions were removed from the NIRC. In practice, this made the “additional exemption for PWD dependents” inoperative under current individual income tax computations.
What may remain relevant: If a benefactor is engaged in business/practice of profession and uses itemized deductions, some expressly allowed PWD-related expenses (when a law/regulation explicitly allows them) could be claimed—but only if such a provision exists and all documentary conditions are met. (In most day-to-day individual cases, there is no special itemized deduction solely for supporting a PWD family member.)

Bottom line: As an individual employee paying taxes under withholding, don’t expect a “PWD dependent” line to reduce your taxable income today. Focus instead on VAT-exempt/discount privileges for the PWD and any healthcare/benefit coverage you can maximize.

5) The VAT-exempt + 20% discount (not income tax, but real savings)

Applies to PWDs (and in certain cases, a companion when indicated) for specific goods/services: e.g., medicines, medical/dental services, professional fees of physicians, diagnostic/lab fees, domestic air/sea/land fares, hotel/lodging, restaurants, recreation (as legally defined), and certain necessities for exclusive personal use of the PWD.
Mechanics: Present PWD ID (and booklet) + valid government ID; sign the charge slip/invoice; ensure the invoice is issued in the PWD’s name (or with proper companion authorization when allowed).
Effect on receipts: The invoice should show less 20%, and no VAT charged (0% VAT/“VAT-exempt sale”).
Tax angle for establishments: The discount is a deductible expense; the sale is VAT-exempt—follow invoicing rules to support both.

6) Employer incentives for hiring PWDs (this is income-tax relevant—on the employer side)

Private entities that employ PWDs may qualify for additional deductions against taxable business income, subject to the implementing rules. Typical features of these incentives include:

An additional deduction from gross income equal to a percentage (commonly cited as 25%) of the total amount of salaries and wages paid to qualified PWD employees within the taxable year.
A possible additional deduction (often up to 50% of direct costs) for modifications/renovations to improve PWD accessibility in the workplace (e.g., ramps, accessible restrooms), subject to the technical standards and approvals under the Magna Carta/IRR and the National Building Code.

Eligibility & paperwork (expect these in practice):

The PWD employee must be properly hired (with standard employment documents), duly registered with DOLE, and must present a valid PWD ID.
Employers must keep payroll records, alpha lists, copies of PWD IDs, DOLE certifications/endorsements (when required), and BIR-compliant books and official receipts to support the additional deduction.
Accessibility improvements usually need plans/permits, proof of cost, and sometimes pre/post-inspection or certification that the works comply with accessibility standards.

Tip for HR/Tax: Build a clean documentation pack per PWD hire (PWD ID, DOLE registration/endorsement, employment contract, payroll proofs) and keep a capex file for accessibility renovations (permits, ORs/JOAs, as-builts). Your external auditor will look for these before signing off on the additional deduction.

7) For self-employed PWDs (sole proprietors or professionals)

You are taxed like any other self-employed taxpayer—graduated rates or the 8% option (if eligible).
Being a PWD does not by itself grant an income-tax exemption.
You can avail of VAT-exempt status on your purchases (as a consumer PWD) for qualified goods/services—but your sales follow whatever VAT/percentage tax rules apply to your business.
If you employ PWDs in your enterprise, you (as employer) may claim the employer incentives described above, subject to requirements.

8) Payroll & compliance hygiene (for employees and HR)

Employees (PWD):
- Make sure your TIN and BIR Form 1902/1901 registration are in order.
- If you’re an MWE, reconfirm that your basic wage and statutory premiums are being treated tax-exempt.
- Track the 13th-month/other benefits against the non-taxable cap; any excess is taxable.
- Keep personal PWD ID updated; use your purchase booklet for VAT-exempt/discounted buys to avoid denial at point of sale.
HR/Payroll:
- Do not code a PWD employee as income-tax-exempt just because they’re a PWD. Apply tax rules based on MWE status, brackets, and statutory exclusions.
- If the company claims employer incentives, coordinate DOLE/BIR paperwork early; embed PWD status flags in HRIS so Finance can capture the additional deduction correctly.

9) Common misconceptions—cleared up

“PWDs don’t pay income tax.” ❌ Incorrect. They pay income tax unless their income is exempt for other reasons (e.g., MWE, exempt benefits).
“Parents can still claim PWD dependents to reduce tax.” ❌ Not under the current post-TRAIN rules on individual income tax (no personal/additional exemptions).
“Any allowance given to a PWD employee is tax-exempt.” ❌ Allowances are generally taxable unless they qualify as de minimis or are covered by an exclusion under the NIRC.
“A company must be tax-exempt if it hires PWDs.” ❌ The company is not tax-exempt. It may claim additional deductions (profit-reducing, not tax-rate-reducing) if it meets the incentive rules.

10) Quick decision map

If you’re a PWD employee:

Check if you’re an MWE → if yes, your basic wage + statutory premiums are income-tax-exempt.
Track your 13th-month/benefits against the cap.
Use your PWD ID for 20% + VAT-exempt purchases.

If you’re a parent/spouse/guardian:

Don’t expect a current income-tax deduction/exemption merely for supporting a PWD.
Focus on ensuring the PWD’s ID and booklet are used to capture VAT-exempt/discount benefits.
If self-employed and using itemized deductions, ask your tax adviser whether any explicitly allowed PWD-related expenses apply to your case (rare in practice).

If you’re an employer:

You may claim additional deductions for PWD hires and accessibility improvements—but only with proper documentary support.
Keep payroll and substantiation airtight; coordinate with DOLE/BIR well before filing season.

11) Practical documents checklist

For PWDs:

Valid PWD ID (and renewal if expiring)
Purchase booklet and, if needed, authorization letter for a companion (for situations allowed by the rules)
Government ID for verification at point of sale

For employers:

Copies of PWD IDs of employee-PWDs
Employment contracts, DOLE registration/endorsements (if required for incentives)
Payroll and withholding tax records showing wages paid
For accessibility works: permits, invoices/receipts, proof of cost, as-built/inspection compliance

12) Bottom line

There is no across-the-board income-tax exemption for PWDs in the Philippines.
Real relief comes from:
1. MWE and other universal income-tax exclusions (apply if you qualify),
2. The 20% discount + VAT exemption on defined purchases (a big, everyday savings lever), and
3. Employer-side income-tax incentives for hiring PWDs and improving accessibility (which encourage inclusive employment).

If you tell me your status (employee or self-employed), pay setup (monthly/daily/MWE), and whether you’re an employer/HR, I can lay out an exact, numbers-based checklist for your situation (including sample payslip math and documentation flow).