Palace: 20% tax on bank interest ‘nothing new’

Malacañang on Friday urged the public to remain calm amid viral misinformation about the 20 percent tax on interest earned from bank deposits, assuring Filipinos that their savings are untouched and that the tax is neither new nor alarming.

At a Palace press briefing, Presidential Press Officer Claire Castro clarified that the tax applies only to interest income, not to the actual savings amount.

“This is not a new tax. And it doesn’t affect your savings,” Castro emphasized. “What’s being taxed is the interest you earn, not the money you put in the bank.”

She dismissed as fake news the social media claims that the government is now taxing bank deposits, branding such posts as deliberate attempts to spread fear and erode public trust in the administration.

“Some people are twisting the facts,” Castro said. “They know the truth, but they’re distorting it to confuse the public.”

The 20 percent final withholding tax on bank interest has actually been in place since 1998, under the National Internal Revenue Code, and was carried forward by the Capital Markets Efficiency Promotion Act (CMEPA). The only recent change, Castro explained, is the removal of preferential tax rates for time deposits locked in for longer maturities.

“That’s the only adjustment,” she said. “In fact, over 99.6% of all deposits were already subject to the 20% tax even before the CMEPA. Only 0.4% enjoyed lower rates, and that’s what’s being realigned now.”

To illustrate, Castro broke down the math: For P100,000 in a savings account, only the interest income of P83.33 would be taxable, meaning a mere P16.66 deduction.

“No one is taking money from your savings,” she stressed. “Only a small portion of your earned interest goes to tax, and that amount helps fund government programs that aim to uplift lives.”

The Palace also called on the public to be more discerning about what they read and share online, as waves of misinformation continue to spread.

“Let’s not fall for fearmongering,” Castro said. “This is part of our collective contribution to a better Philippines.”

The clarification comes as the Marcos administration continues efforts to improve transparency, streamline tax policy, and curb disinformation that could disrupt public confidence in fiscal reforms.