Net received from a performance bonus after tax.
Net bonus received
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Tax on bonus
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Taxable portion
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The shared exemption pool your bonus competes for
A performance bonus in the Philippines is not taxed in isolation. It draws from the same tax-free allowance as your 13th-month pay and other year-end benefits, a single pool capped at PHP 90,000 a year. Whatever the calculator applies as already used by your 13th-month pay comes straight off the top of that PHP 90,000, and only the leftover room shelters your bonus. Once the pool is exhausted, every additional peso of bonus is fully taxable. This tool's whole purpose is to show how much room is left and what the taxable remainder costs you.
The order of events matters because the 13th-month pay usually arrives first and claims the exemption before the bonus does. If your 13th-month was large, there may be little or nothing left for the bonus. If it was small, the bonus enjoys a generous shelter. So two employees with identical bonuses can pay very different tax depending purely on how much of the PHP 90,000 their other benefits already consumed.
How the taxable slice is taxed
The portion of the bonus that exceeds the leftover exemption is stacked on top of your regular annual taxable income and taxed at your marginal rate. The calculator does this honestly: it computes your income tax with the bonus included, computes it again without the bonus, and the difference is the true tax on the bonus. That captures the fact that a bonus can be taxed at a higher band than your salary if it pushes you up a bracket. The Philippine system this tool models is the graduated TRAIN structure, where the first PHP 250,000 of annual taxable income is exempt and rates rise in steps to 35 percent.
A PHP 100,000 bonus when half the pool is gone
Use the defaults. You receive a PHP 100,000 bonus, your 13th-month pay has already used PHP 50,000 of the exemption, and your annual taxable income is PHP 700,000. The leftover exemption is PHP 90,000 minus PHP 50,000, which is PHP 40,000. So PHP 40,000 of the bonus is tax-free and the taxable portion is PHP 60,000. That PHP 60,000 stacks on top of PHP 700,000, landing in the 20 percent band as modelled here, so the extra tax is PHP 12,000. Your net bonus is PHP 100,000 minus PHP 12,000, which is PHP 88,000.
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A common surprise: the bonus that is fully taxed
If your 13th-month pay alone already reaches or exceeds PHP 90,000, the exemption is gone before the bonus arrives, and the entire bonus is taxable. Set the used field to PHP 90,000 and watch the leftover drop to zero. People are often caught out by this, expecting a chunk of every bonus to be tax-free, when in reality the shelter is a single annual allowance that benefits stack into and quickly fill. The higher your other year-end benefits, the less protection your bonus gets.
A practical judgement for anyone negotiating compensation: a peso of bonus paid after the exemption is used is worth less than a peso of bonus paid into unused room. If you have any say in the timing or labelling of year-end pay, it can be worth understanding which benefits have already consumed the PHP 90,000. The exemption ceiling and the tax bands are set by the BIR and have been adjusted under tax reform over the years, so treat the PHP 90,000 cap and the 20 percent band used here as the calculator's assumptions and confirm the current figures with the BIR.
Is the 13th-month pay itself ever taxable?
Only the part above the PHP 90,000 pool. The 13th-month pay and other benefits are tax-free up to that combined ceiling. If your 13th-month plus other benefits exceed PHP 90,000, the excess is taxable at your marginal rate, exactly like the taxable portion of a bonus. The pool is shared, so the 13th-month and the bonus are not taxed under separate allowances.
Why does the tool ask for my annual taxable income?
Because a bonus is taxed at your marginal rate, the answer depends on how much you already earn. A PHP 60,000 taxable bonus sitting on top of a PHP 700,000 income is taxed in the 20 percent band, but the same bonus on top of a much higher income could be taxed at 25 or 30 percent. Entering your annual taxable income lets the calculator place the bonus in the correct band rather than guessing.