Quick answer: For most workers, 13th month pay is not taxable. Your 13th month pay and other benefits are tax-exempt up to ₱90,000 per year. Only the portion above ₱90,000 is added to your taxable income and taxed at your regular rate. Check if any of yours is taxable →
The ₱90,000 rule in one paragraph
Section 32(B)(7)(e) of the National Internal Revenue Code, as amended by RA 10963 (the TRAIN law), excludes from gross income the 13th month pay and other benefits received by officials and employees of public and private entities, up to a total of ₱90,000. The ceiling has applied since 2018, raised from ₱82,000. It is a limit on the exclusion, not a deduction: if you receive ₱60,000 you pay nothing on it, and if you receive ₱100,000 you pay tax on ₱10,000.
How the ₱90,000 ceiling works
The ₱90,000 is a combined ceiling for your 13th month pay and other benefits. By law it covers:
- 13th month pay under Presidential Decree No. 851 (private sector)
- the year-end bonus and cash gift of national and local government employees under RA 6686
- benefits of employees not covered by PD 851, such as managers, who still get a 13th month pay
- other benefits such as productivity incentives and the Christmas bonus
In practice, add up the 13th month pay, 14th month pay, mid-year bonus, Christmas bonus and productivity or performance bonus you received during the year. If the total is ₱90,000 or less, none of it is taxable. If it is more than ₱90,000, only the excess is taxable.
Benefits that are not in the ceiling include your regular pay, overtime and allowances (which are taxable or exempt under their own rules) and the de minimis benefits (rice subsidy, uniform allowance, medical cash allowance and so on, each with its own limit). Ask HR how de minimis amounts above their limits are treated; see our guide to de minimis benefits.
Worked examples
Below the ceiling
13th month pay ₱30,000, Christmas bonus ₱10,000 → total ₱40,000.
₱40,000 is under ₱90,000, so the entire amount is tax-free.
Right at the limit
13th month pay ₱45,000 plus a 14th month pay of ₱45,000 → total ₱90,000. Still fully exempt.
Above the ceiling
13th month pay ₱80,000, plus a ₱30,000 bonus → total ₱110,000.
- Tax-exempt: ₱90,000
- Taxable excess: ₱110,000 − ₱90,000 = ₱20,000
That ₱20,000 is added to your annual taxable income and taxed under the regular income tax brackets.
High earner with several bonuses
Monthly basic salary ₱150,000 gives a 13th month pay of ₱150,000. Add a ₱100,000 performance bonus and you receive ₱250,000 in benefits.
- Tax-exempt: ₱90,000
- Taxable excess: ₱160,000
Does the excess push me into a higher bracket?
The taxable excess is simply added to the rest of your taxable compensation for the year, so it is taxed at your marginal rate. The 2026 schedule (unchanged since 2023) is 0% up to ₱250,000, 15% to ₱400,000, 20% to ₱800,000, 25% to ₱2 million, 30% to ₱8 million and 35% above. The extra tax on a ₱20,000 excess depends on where the rest of your income sits:
| Other taxable income for the year | Marginal rate | Extra tax on ₱20,000 excess |
|---|---|---|
| ₱240,000 | 0% then 15% (crosses ₱250,000) | ₱1,500 |
| ₱300,000 | 15% | ₱3,000 |
| ₱500,000 | 20% | ₱4,000 |
| ₱900,000 | 25% | ₱5,000 |
“Other taxable income” is your annual compensation after the mandatory SSS, PhilHealth and Pag-IBIG contributions. Use the Income Tax Calculator for your exact situation.
Withholding in December
Your 13th month pay is released once a year, usually in November or December. Employers do not withhold tax on the part up to ₱90,000. On the last payroll of the year they annualize your pay: they add up everything you earned, include any benefits above ₱90,000, compute the annual tax and withhold the difference from what they already deducted. That is why a larger-than-normal tax deduction can appear in December if you had bonuses above the ceiling. See how monthly withholding works in withholding tax explained or try the Withholding Tax Calculator.
If you changed jobs during the year, benefits from both employers count toward the same ₱90,000 ceiling when your tax is settled for the year (your Form 2316).
Related reading
- How to compute 13th month pay
- Prorated 13th month pay
- 14th month pay: is it mandatory and is it taxable?
- 13th month pay for government employees
Your employer reports the tax-exempt and taxable parts of your 13th month on BIR Form 2316.
Sources: National Internal Revenue Code Sec. 32(B)(7)(e) as amended by RA 10963 (TRAIN), BIR Revenue Regulations No. 11-2018; BIR. For estimation only — confirm with your HR department or the BIR.