How to Compute 13th Month Pay in the Philippines

Published: 2026-05-01 · Updated: 2026-05-01 · SuweldoKo

How do you compute 13th month pay in the Philippines?

Divide your total basic salary earned during the year by 12. If you earned PHP 360,000 in basic salary over 12 months, your 13th month pay is PHP 30,000. Employees who worked less than 12 months receive a prorated amount based on months actually worked.

Full Explanation

The 13th month pay is a mandatory benefit under Presidential Decree No. 851, requiring all private-sector employers to pay rank-and-file employees a minimum of one-twelfth (1/12) of their total basic salary earned within the calendar year.

Examples

Scenario	Formula	Example Result
Full year worked	Annual basic salary ÷ 12	PHP 360,000 ÷ 12 = PHP 30,000
Partial year (6 months)	(Monthly basic × months worked) ÷ 12	(PHP 30,000 × 6) ÷ 12 = PHP 15,000
With unpaid absences	(Annual basic − LWOP deductions) ÷ 12	(PHP 355,000) ÷ 12 = PHP 29,583

Tax Exemption Rule

Under the TRAIN Law (Republic Act 10963), the first PHP 90,000 of the combined 13th month pay and other benefits is income tax-exempt. Any excess is included in the employee's taxable income for the year.

Related Rules

The 13th month pay ceiling applies to the combined total of: (1) 13th month pay, (2) Christmas bonuses, (3) productivity incentive bonuses, (4) loyalty awards, and (5) gifts in cash or in kind. Once the combined total exceeds PHP 90,000, the excess is taxable.

Common Questions

Mga Karaniwang Tanong

How do you compute 13th month pay in the Philippines?▾

Divide your total basic salary earned during the year by 12. Employees who worked less than 12 months receive a prorated amount. Unpaid absences reduce the total basic salary earned and therefore reduce the 13th month pay.

Is 13th month pay taxable in the Philippines?▾

The first PHP 90,000 of combined 13th month pay and other benefits is tax-exempt under the TRAIN Law. Any amount above PHP 90,000 is added to taxable income and taxed at the applicable progressive rate.

Who is entitled to 13th month pay?▾

All rank-and-file employees in the private sector who have worked for at least one month during the calendar year are entitled to 13th month pay under Presidential Decree 851.

When is 13th month pay released?▾

13th month pay must be paid on or before December 24 of each year. Employers may pay in two installments: half on or before May 15 and the remaining half on or before December 24.

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