LOCAL GOVERNMENT UNITS (LGUs) across the country are poised to receive one of the largest fiscal boosts yet, with the Department of Budget and Management (DBM) confirming a projected P1.2 trillion National Tax Allotment (NTA) for 2026.
The expanded allocation, which is equivalent to 15 percent increase from P102 trillion, signals the continued recovery of government revenues following the pandemic and reinforces the national government’s commitment to fiscal decentralization under the Local Government Code of 1991 and the landmark Mandanas-Garcia ruling.
In a budget memorandum issued on December 26, the DBM said the indicative NTA shares should guide LGUs in crafting their respective financial plans for 2026, as they prepare budgets aligned with the proposed P6.793-trillion National Expenditure Program (NEP).
DISTRIBUTION FORMULA
The NTA represents 40 percent of national tax collections, based on revenues collected three years prior—in this case, 2023, when government revenues rose by eight percent to P3.82 trillion.
For 2026, the NTA distribution will be allocated as follows:
- Municipalities: P404.49 billion
- Cities: P274.1 billion
- Provinces: P273.82 billion
- Barangays: P238.1 billion
Allocations are expected to benefit 83 provinces, 149 cities, 1,491 municipalities, and over 41,900 barangays nationwide. Adjustments were made following the adoption of the 2024 Census of Population, ensuring that population shifts are accurately reflected in local funding shares.
REVENUE AND GROWTH
Of the projected P1.2 trillion NTA for 2026, 73 percent (P868.65 billion) will come from the Bureau of Internal Revenue (BIR), while P321.79 billion represents LGU shares from the tariff collected by the Bureau of Customs (BOC).
Some P66.21 million will be coming from other government agencies.
The DBM noted that the increase reflects improved revenue performance as the economy sustained its post-pandemic rebound, strengthening LGUs’ fiscal capacity to meet devolved responsibilities.
FOR HEART PURPOSES
With higher fiscal space, LGUs are expected to further strengthen their HEARTS priorities—health, education, agriculture, environment, roads and infrastructure, technology and security, and social protection.
“These increased allocations mean greater capacity for LGUs to improve the delivery of essential services to their constituents,” the DBM said, emphasizing the government’s continued support for meaningful devolution.
Under existing rules, LGUs are mandated to allocate at least 20 percent of their NTA for development projects, 10 percent for the Sangguniang Kabataan, and a minimum of five percent for local disaster risk reduction and management.
LGU budgets must also support programs for gender and development, senior citizens, persons with disabilities, HIV prevention and care, and child protection.
BIGGEST GAINERS
Among the regions, Calabarzon (Cavite, Laguna, Batangas, Rizal, Quezon) is set to receive the largest allocation at P141.15 billion, followed by Central Luzon (P115.9 billion), Metro Manila (P71.57 billion), and the Bicol Region (P71.53 billion).
On the lower end, allocations will go to the Cordillera Administrative Region (P35.64 billion), Caraga (P46.15 billion), and SOCCSKSARGEN (P50.16 billion).
By law, NTA funds will first cover the cost of providing basic services and facilities, ensuring that development remains anchored at the grassroots level.
TURNING POINT FOR LGUs
Since the full implementation of the Mandanas ruling, LGUs have been receiving a broader share of national taxes—including collections from both the BIR and BOC—marking a significant shift from the previous system that relied solely on BIR collections.
As LGUs assume expanded responsibilities, the P1.2-trillion NTA in 2026 stands as both an opportunity and a test—challenging local leaders to translate increased fiscal resources into tangible improvements in governance, public services, and inclusive local development.