Kodigo Labs ToolsHow 13th month pay is computed
In the Philippines, 13th month pay is one-twelfth (1/12) of the total basic salary you earned within the calendar year. If you worked the whole year with no unpaid absences, it is simply equal to one month of basic salary.
Example: Maria earns ₱25,000 per month and joined her company in April, so she worked 9 months. Her total basic salary is ₱25,000 × 9 = ₱225,000. Her 13th month pay is ₱225,000 ÷ 12 = ₱18,750.
What counts as basic salary
Basic salary is the pay for work actually done, excluding overtime, holiday pay, night shift differential, and allowances that are not part of your regular wage. Paid leaves (like used vacation or sick leave with pay) are usually included, while unpaid absences reduce the total.
Tax on 13th month pay
Under the TRAIN Law, your 13th month pay and other benefits are tax-free up to a combined ₱90,000 per year. If the total goes above that, only the excess is taxed together with your regular income. Use our Philippine Income Tax Calculator to see the full picture.
Frequently asked questions
Who is entitled to 13th month pay?
Under Presidential Decree No. 851, all rank-and-file employees in the private sector who have worked for at least one month during the calendar year are entitled to 13th month pay, regardless of how they are paid.
When should 13th month pay be released?
It must be paid on or before December 24 each year. Employers may also pay half before the opening of the school year and the rest before December 24.
Is 13th month pay taxable?
13th month pay and other benefits such as bonuses are tax-exempt up to a combined ₱90,000 per year. Only the amount above ₱90,000 is added to your taxable income.
Are overtime, allowances and night differential included?
Generally no. The computation uses basic salary only. Overtime pay, holiday pay, night differential and allowances not part of basic salary are usually excluded, unless your company policy or contract says otherwise.
What if I resigned or was hired mid-year?
You are still entitled to a pro-rated 13th month pay: the total basic salary you actually earned during the year divided by 12. Choose "months worked" and enter the number of months you were employed.
Does 13th month pay apply to government employees?
No. PD 851 covers rank-and-file employees in the private sector. Government employees receive a mid-year bonus and a year-end bonus, each equal to one month's basic salary, plus a ₱5,000 cash gift under DBM rules. The ₱90,000 tax exemption still applies to those bonuses.