Is 13th month pay taxable in the Philippines?

Answer

13th month pay and other benefits are tax-exempt up to a ceiling. Under the TRAIN law (Republic Act No. 10963), the combined 13th month pay and other benefits are exempt from income tax up to ₱90,000; any amount above that ceiling is taxable.

This means most rank-and-file employees receive their 13th month pay tax-free, and only the portion of 13th month pay plus other benefits exceeding ₱90,000 is subject to income tax. Tax treatment can change with legislation, so confirm the current ceiling for the year in question.

Sources & further reading

• Full report: 13th month pay & final pay

Cases on this topic

• Alliance of Government Workers v. Minister of Labor and Employment
• Bani Rural Bank v. De Guzman
• Boie-Takeda Chemicals, Inc. v. De la Serna
• Brokenshire Memorial Hospital v. NLRC
• Central Azucarera de Tarlac v. CAT Labor Union-NLU
• Dario Nacar v. Gallery Frames
• Davao Fruits Corporation v. Associated Labor Unions
• Dentech Manufacturing Corporation v. NLRC

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