13th month pay equals your total basic salary for the year divided by 12. It is tax-free up to ₱90,000 (combined with other benefits); only the excess is taxed. It is a legal right for all rank-and-file private-sector employees and must be paid by 24 December.
13th month pay is one of the most searched-for pay questions in the Philippines — and one of the most misunderstood. This guide explains how it is computed, when it is taxed, and how it fits with the TRAIN-law income tax on your regular salary. To estimate your monthly take-home, use our Philippines income tax calculator.
How 13th month pay is computed
The formula is simple: total basic salary earned during the year ÷ 12. "Basic salary" excludes allowances, overtime and other benefits. If you earned a steady ₱30,000 monthly basic for all 12 months, your 13th month pay is ₱30,000. If you joined in, say, July, it is prorated — six months of basic salary divided by 12.
The ₱90,000 tax-free limit
Under the TRAIN law, 13th month pay and "other benefits" (such as Christmas bonuses) are tax-free up to ₱90,000 combined per year. Only the portion above ₱90,000 is added to your taxable income and taxed at your regular rate. For most workers earning under ₱90,000 a month in basic pay, the entire 13th month is tax-free.
Who is entitled?
Every rank-and-file employee in the private sector who worked at least one month in the calendar year is entitled to 13th month pay, regardless of role or how they are paid. Managerial employees are technically excluded by law, though many employers pay them anyway. It must be paid on or before 24 December.
How your regular salary is taxed
Your monthly salary is taxed differently from your 13th month. First, mandatory contributions are deducted and are tax-exempt: SSS (5% in 2025), PhilHealth (2.5%) and Pag-IBIG (up to ₱200). What remains is your taxable income, and under the TRAIN brackets the first ₱250,000 a year is tax-free, then 15% to 35%. This is why a worker on around ₱20,000 a month often pays little or no withholding tax.
A quick example
On a ₱30,000 monthly salary, contributions total about ₱2,450, leaving ₱27,550 taxable per month (₱330,600 a year). The withholding tax works out to about ₱1,008 a month, so take-home is roughly ₱26,500. The 13th month pay of ₱30,000 in December is fully tax-free, since it is under the ₱90,000 limit.
Related Calculators
- Philippines Income Tax Calculator — monthly withholding tax and take-home.
- VAT Calculator — add or remove 12% VAT.
- Philippines calculators hub — all PH tools.
Frequently Asked Questions
How is 13th month pay computed?
Total basic salary for the year ÷ 12. A full year on ₱30,000 basic gives ₱30,000; partial years are prorated.
Is 13th month pay taxable?
It is tax-free up to ₱90,000 combined with other benefits; only the excess is taxed.
Who is entitled?
All rank-and-file private-sector employees who worked at least one month in the year, paid by 24 December.
How much income tax do I pay?
Under the TRAIN law, the first ₱250,000 of annual taxable income is tax-free, then 15% to 35%, after SSS/PhilHealth/Pag-IBIG.