The estate tax in the Philippines is a flat 6% on the net value of a deceased person’s estate, filed on BIR Form No. 1801 within one year of death. The 6% rate has applied since the TRAIN Law took effect in 2018, replacing an older graduated scale of 5% to 20%. Net value means the gross estate minus allowable deductions, and because every citizen or resident decedent gets a PHP 5 million standard deduction with no paperwork required, many smaller estates end up owing nothing at all.
What Goes Into the Gross Estate
The gross estate is the starting figure. For Filipino citizens and resident aliens, it covers every asset the decedent owned at death, wherever located. Non-resident aliens are taxed only on property physically situated in the Philippines.
Typical assets include land and buildings, vehicles, jewelry, bank deposits, and shares of stock. Valuation follows fixed rules rather than whatever number the heirs choose:
- Real property is valued at the higher of the BIR zonal value or the local assessor’s assessed value.
- Listed shares use the closing price on the Philippine Stock Exchange on the date of death.
- Unlisted common shares are valued at book value based on the corporation’s latest financial statements.
- Unlisted preferred shares are typically valued at par.
Deductions That Lower the Taxable Estate
Deductions are where the tax bill actually gets shaped. Get these right and a large estate can shrink to a modest one.
Standard Deduction
Every estate of a Filipino citizen or resident alien receives a flat PHP 5 million standard deduction with no supporting documents required. Non-resident alien decedents get PHP 500,000 instead. If the gross estate is PHP 5 million or below and the decedent was a citizen or resident, this deduction alone wipes out the taxable base.1Bureau of Internal Revenue. Revenue Regulations No. 12-2018 – Consolidated Revenue Regulations on Estate Tax and Donors Tax
Family Home
The fair market value of the family home is deductible up to PHP 10 million. Anything above the cap doesn’t count. The decedent or their family must have actually lived in the home at death, and heirs should be ready to present a barangay certification confirming that.1Bureau of Internal Revenue. Revenue Regulations No. 12-2018 – Consolidated Revenue Regulations on Estate Tax and Donors Tax
Vanishing Deduction
If the decedent inherited or was gifted property within five years before death, and that earlier transfer was already taxed, the estate can claim a vanishing deduction to avoid double taxation. The allowable percentage falls as the gap widens:
- Within 1 year before death: 100%
- Over 1 but within 2 years: 80%
- Over 2 but within 3 years: 60%
- Over 3 but within 4 years: 40%
- Over 4 but within 5 years: 20%
Beyond five years, the deduction disappears.2Supreme Court E-Library. Republic Act No. 7499
Other Allowable Items
The estate can also deduct claims by creditors, unpaid mortgages on estate property, transfers to the Philippine government for exclusively public purposes, and uninsured casualty losses (fire, storms, theft, and the like) that occurred before the filing deadline.
One change catches many families off guard. Under TRAIN, funeral expenses, judicial expenses, and medical expenses are no longer deductible. Older guides sometimes still list them.3Lawphil. Republic Act No. 10963 – Tax Reform for Acceleration and Inclusion
Working Through the Math
Subtract allowable deductions from the gross estate, then multiply the remainder by 6%.
Take a decedent who owned real property worth PHP 8 million, PHP 3 million in bank deposits, and a vehicle worth PHP 1 million. Gross estate: PHP 12 million. Deductions: PHP 5 million standard, PHP 4 million for the family home (below the cap), and PHP 500,000 in outstanding debts. Total deductions: PHP 9.5 million. Net taxable estate: PHP 2.5 million. Estate tax due: PHP 150,000.1Bureau of Internal Revenue. Revenue Regulations No. 12-2018 – Consolidated Revenue Regulations on Estate Tax and Donors Tax
Filing the Return
The executor, administrator, or any legal heir files BIR Form No. 1801 within one year of the decedent’s death. The BIR Commissioner can grant up to a 30-day extension in meritorious cases, but the request has to be filed before the original deadline lapses.4Bureau of Internal Revenue. Guidelines and Instructions for BIR Form No. 1801
If the gross estate exceeds PHP 5 million, the return must include a Certified Public Accountant’s statement listing the assets, claimed deductions, and computed tax. For deaths before January 1, 2018, the CPA threshold was PHP 2 million.4Bureau of Internal Revenue. Guidelines and Instructions for BIR Form No. 1801
Payment is due when you file. You can pay through an authorized agent bank or at the Revenue District Office where the decedent was registered. Before filing, the estate itself needs a Tax Identification Number, obtained using BIR Form No. 1904.
What Happens If You Miss the Deadline
Unsettled estates that drag on for years pile up penalties that can rival the original tax:
- A 25% surcharge on the unpaid tax for late filing or late payment.
- 20% annual interest on the unpaid balance, running from the original due date until payment.
- A compromise penalty scaling with the unpaid amount, from PHP 1,000 for amounts under PHP 5,000 up to PHP 50,000 for amounts above PHP 5 million.
On a PHP 500,000 estate tax left unpaid for three years, the 25% surcharge alone adds PHP 125,000, and 20% annual interest adds roughly PHP 300,000. The bill nearly doubles. The BIR does not waive these penalties lightly.5Bureau of Internal Revenue. Penalties for Late Filing of Tax Returns
Installment and Hardship Options
If the estate lacks cash at filing, there are two ways to spread payment.
The first is a cash installment plan. File the return on time, indicate a schedule (monthly, quarterly, semi-annually, or annually), and pay the full amount within two years from the filing date. With BIR approval, no penalties or interest run during that period. If the two years lapse with a balance still owing, penalties and interest apply on the remainder, computed from the original due date.1Bureau of Internal Revenue. Revenue Regulations No. 12-2018 – Consolidated Revenue Regulations on Estate Tax and Donors Tax
The second is a hardship extension. When the Commissioner finds that immediate payment would cause undue hardship, the deadline can stretch up to five years for judicially settled estates or two years for extrajudicially settled ones. Approval is discretionary, and the hardship bar is a real one.1Bureau of Internal Revenue. Revenue Regulations No. 12-2018 – Consolidated Revenue Regulations on Estate Tax and Donors Tax
Transferring Title to the Heirs
Paying the tax is not the last step. To transfer titles on real property, vehicles, shares, or other registrable assets, the heirs need an electronic Certificate Authorizing Registration (eCAR) from the BIR. Without it, the Registry of Deeds, the Land Transportation Office, and banks will not put the assets in the heirs’ names.
The Revenue District Office typically requires:
- The filed estate tax return with the official receipt or validated deposit slip.
- The approved ONETT Computation Sheet.
- The transfer document, usually an extrajudicial settlement deed or a court order of partition.
- Payment of the certification fee and documentary stamp tax.
- A Special Power of Attorney if someone other than the heirs is handling the filing.
Processing runs several weeks and varies by RDO. Incomplete documents are the most common cause of delay.6Bureau of Internal Revenue. Processing and Issuance of Electronic Certificate Authorizing Registration for Sale, Donation, or Estate
Withdrawing From Bank Accounts
Bank accounts follow a separate rule. Heirs may withdraw from a decedent’s account within one year of death without a full eCAR, provided the estate has been registered with the BIR and the heirs present the estate’s TIN and BIR Form No. 1904 stamped by the RDO. The bank deducts a 6% final withholding tax on the withdrawal. If the one-year window passes without withdrawal, banks generally freeze the account until the estate tax is fully settled and the eCAR is issued.
Where the Amnesty Stands
Republic Act No. 11956 offered an estate tax amnesty covering decedents who died on or before May 31, 2022, letting heirs settle at the flat 6% rate without surcharges, interest, or compromise penalties.7Lawphil. Republic Act No. 11956 The filing window closed on June 14, 2025. Families who missed it now face the full penalties described above. As of 2026, no new amnesty has been enacted, though Congress has extended prior programs more than once.8Bureau of Internal Revenue. Estate Tax Amnesty Flyer
Non-Residents and Cross-Border Estates
Non-resident aliens are taxed only on Philippine-situs property. Their standard deduction is PHP 500,000, and other deductions are generally prorated by the share of Philippine assets in the worldwide estate. Where a reciprocity provision applies, treaty terms can reduce the tax.
U.S. citizens or residents who own Philippine assets will owe Philippine estate tax on those assets. The U.S. permits a credit for foreign death taxes paid, claimed on IRS Form 706-CE, so the same property is not fully taxed twice.9Internal Revenue Service. About Form 706-CE, Certification of Payment of Foreign Death Tax