What Is 13th Month Pay?
Presidential Decree No. 851 requires covered employers to pay rank-and-file employees a 13th month pay each year. In principle, it is at least 1/12 of the employee’s total basic salary earned in the calendar year (subject to legal interpretations and exclusions defined in the rules).
It is not the same as a voluntary “Christmas bonus” — though employers sometimes label payments in payroll systems in confusing ways.
Who Is Covered?
Rank-and-file employees in the private sector are generally covered. Managerial employees are often excluded by definition in the implementing rules, but titles alone do not decide status — actual duties matter.
If you are unsure, review the IRR of PD 851 and your contract, or ask HR how your role is classified.
How It Is Computed (Simplified)
A common approach:
- 13th month = Total basic salary earned in the year ÷ 12
If you started mid-year or had unpaid leave, your basic earned in those months is usually lower, so the benefit is pro-rated in line with policy and the rules.
Tax: The ₱90,000 Exemption
Under the TRAIN Law, 13th month pay and other bonuses are exempt from income tax up to ₱90,000 per year (aggregate). Amounts beyond that exemption may be taxable — how they are taxed depends on BIR rules and payroll treatment in a given year.
Always check the BIR Revenue Regulations in effect for the calendar year and your employer’s alphalist / withholding practice.
Payment Deadline
Employers must pay on or before December 24 of each year (with possible exceptions such as installment schemes in certain cases — see official guidance).
Use Our 13th Month Calculator
Estimate your benefit with the 13th Month Pay Calculator. For full-year net pay, use the Salary Calculator.
Disclaimer
Amounts depend on basic salary definitions, leave without pay, and other payroll items. This is not tax or legal advice — confirm with HR and a professional for your situation.