Section 284 of the Local Government Code of the Philippines (RA 7160) sets up the formula for the distribution of the allotment.
Typically for municipalities, the IRA accounts for 90% of total revenues.
Since cities have more sources of local revenues, their IRA ranges from 50% to 70% of their total budget.
A portion of each local government unit's allotment is set aside their Sangguniang Kabataan (SK) or youth council.
The IRA is automatically released to each local government unit and may not be held back by the national government for any reason, except in the extreme case of an "unmanageable public sector deficit", in which case the allotment may be adjusted but provided it not be set to "be less than thirty percent (30%) of the collection of national internal revenue taxes of the third fiscal year preceding the current fiscal year".