Mandatory 13th-month pay and any taxable portion.
13th-month pay
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Taxable excess
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Tax on excess
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Your breakdown
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What the law actually promises you
The 13th-month pay is not a bonus your manager can hand out or withhold at will. It is a statutory benefit that every rank-and-file employee in the private sector earns once they have worked at least one month in a calendar year. The formula is deliberately simple: add up the basic salary you actually received from January to December, then divide by twelve. Overtime, holiday premiums, allowances, and cash conversions of unused leave are not part of basic salary, so they sit outside this figure. That is why two people on the same headline package can land on different 13th-month amounts if one of them earned a chunk of pay as overtime.
This calculator takes your total basic salary for the year and the number of months you worked, then prorates accordingly. If you joined in April and worked nine of the twelve months, you receive nine months of accrual, not a full year. The result is the gross 13th-month figure your employer should release, by law, on or before 24 December.
Where tax quietly enters the picture
Here is the part most employees miss. The 13th-month pay shares a single tax-free ceiling with all your other year-end benefits, and the size of that ceiling this calculator applies is PHP 90,000. That figure traces back to the TRAIN law and is administered by the BIR (Bureau of Internal Revenue). Treat it as the amount modelled here and confirm the current ceiling with the BIR, since these thresholds are revised from time to time. Anything inside PHP 90,000 is completely free of income tax. Only the slice above it is added to your taxable income and taxed at whatever band your total earnings reach, under the graduated schedule that starts at zero below PHP 250,000 and rises in steps to 35 percent.
For most salaried Filipinos the 13th-month pay alone never breaches PHP 90,000, so the taxable excess is zero. It only bites for high earners, or for people whose 13th-month pay plus a separate performance bonus together cross the ceiling. A quick judgement call: if your monthly basic is under roughly PHP 90,000, your 13th-month pay on its own will stay tax-free, and the only thing that can push you over is stacking other benefits on top.
A high earner who does cross the ceiling
Suppose an executive earned PHP 4.2 million in basic salary across a full twelve months. The 13th-month pay is PHP 4,200,000 divided by twelve, which is PHP 350,000. The first PHP 90,000 is exempt, leaving a taxable excess of PHP 260,000. Because this slice sits as a standalone amount in the calculator, the graduated table treats the first PHP 250,000 as untaxed and applies 15 percent to the remaining PHP 10,000, giving PHP 1,500 of tax using the rates this calculator applies. The numbers below trace that path.
A common mistake with new joiners and resignees
People who change jobs mid-year often expect a full 13th-month from each employer, then feel short-changed. Each employer only owes the prorated share for the months you were on their payroll. If you resigned in September, your old company computes your 13th-month based on January to September basic pay and releases it as part of your final pay, not in December. Enter the basic salary and months that match a single employer to see that employer's obligation. Pooling figures from two employers into one calculation will overstate the result.
Is 13th-month pay the same as a Christmas bonus?
No. The 13th-month pay is mandatory and formula-driven. A Christmas bonus is discretionary goodwill that an employer may or may not give. They share the PHP 90,000 tax-free ceiling, so a generous Christmas bonus can be what finally pushes your combined benefits into taxable territory, even when the 13th-month pay alone would not.
Do government workers use this formula?
Not exactly. This tool models the private-sector 13th-month pay under the Labor Code rules the BIR taxes. Government personnel receive a year-end bonus and cash gift under a separate compensation framework, so a public servant should rely on the figures their agency publishes rather than this private-sector computation.