Understanding Your Philippine Payslip
If you've ever looked at your payslip and wondered why your take-home pay is significantly lower than your gross salary, you're not alone. Philippine employees are subject to several mandatory government deductions that reduce their net pay.
Before you rely on any numbers for payroll or HR decisions, confirm contribution ceilings, MSC brackets, and premium rates on the official SSS, PhilHealth, Pag-IBIG, and BIR channels — they are updated from time to time.
The Four Major Deductions
1. SSS (Social Security System)
The SSS contribution is based on your monthly salary credit (MSC). Under the final RA 11199 schedule, the employee share is 5% of MSC (employer pays 10% of MSC plus EC), with MSC bands published by SSS. The worked example below uses ₱1,500/month employee SSS on ₱30,000 gross — substitute the amount from your current SSS table.
- If you earn ₱15,000/month, your SSS employee share is typically ₱750 (5% of ₱15,000 MSC)
- At the maximum MSC (₱35,000), the employee share is ₱1,750/month
2. PhilHealth
PhilHealth contributions are set at 5% of your basic monthly salary, split equally between employee and employer. The employee pays 2.5%.
- Minimum contribution: ₱250/month
- Maximum contribution: ₱2,500/month (based on ₱100,000 salary cap)
3. Pag-IBIG (HDMF)
The Pag-IBIG contribution is 2% of your monthly salary, capped at ₱100/month for employees. Employers match this contribution.
4. Income Tax (BIR Withholding Tax)
Under the TRAIN Law (RA 10963), the income tax brackets for 2023 onwards are:
| Annual Taxable Income | Tax Rate |
|---|---|
| Up to ₱250,000 | 0% (Tax-exempt) |
| ₱250,001 – ₱400,000 | 15% on excess |
| ₱400,001 – ₱800,000 | ₱22,500 + 20% on excess |
| ₱800,001 – ₱2,000,000 | ₱102,500 + 25% on excess |
| ₱2,000,001 – ₱8,000,000 | ₱402,500 + 30% on excess |
| Over ₱8,000,000 | ₱2,202,500 + 35% on excess |
Step-by-Step Computation Example
Let's compute the net pay for someone earning ₱30,000/month:
1. Gross Monthly Salary: ₱30,000
2. SSS Deduction: ₱1,500 (5% of ₱30,000 MSC)
3. PhilHealth Deduction: ₱750 (2.5% of ₱30,000)
4. Pag-IBIG Deduction: ₱100 (capped)
5. Taxable Income = ₱30,000 - ₱1,500 - ₱750 - ₱100 = ₱27,650/month
6. Annual Taxable Income = ₱27,650 × 12 = ₱331,800
7. Annual Tax = (₱331,800 - ₱250,000) × 15% = ₱12,270
8. Monthly Withholding Tax = ₱12,270 ÷ 12 = ₱1,022.50
9. Total Monthly Deductions = ₱1,500 + ₱750 + ₱100 + ₱1,022.50 = ₱3,372.50
10. Net Monthly Pay = ₱30,000 - ₱3,372.50 = ₱26,627.50
13th Month Pay
Under PD 851, all rank-and-file employees are entitled to a 13th month pay equal to 1/12 of their total basic salary within a calendar year. This is tax-exempt up to ₱90,000.
Tips to Maximize Your Take-Home Pay
1. Understand your tax bracket — knowing where you fall helps you plan
2. Consider PERA (Personal Equity and Retirement Account) for tax-advantaged savings
3. Check if you qualify for deductions — medical allowances, de minimis benefits
4. Use our [Salary Calculator](/salary-calculator) to instantly compute your net pay
Disclaimer
This article explains typical payroll mechanics for employed workers in the Philippines. Your actual deductions depend on MSC tables, PhilHealth circulars, BIR rulings, and company policy (allowances, de minimis, loan repayments, etc.). Use it for education and rough checks — not as tax or legal advice. For binding figures, rely on your official payslip and a licensed CPA or HR.