13th month pay: the exact computation (2026)
13th month pay is mandatory in the Philippines for rank-and-file employees (PD 851, as amended), payable on or before December 24. Here's the exact formula, what to include, what to exclude, and the tax threshold that changed everything.
The formula
"Basic salary earned" = basic monthly salary × months worked (or the sum of basic pay actually received). Crucially, it's pro-rata: worked 8 months of the year? You get 8/12 of one month's basic pay — not zero, not a full month.
Worked examples
| Situation | Basic salary | 13th month |
|---|---|---|
| Full year | ₱18,000/mo × 12 | ₱18,000 |
| Started April 1 (9 months) | ₱22,000/mo | ₱16,500 |
| Resigned effective Oct 31 (10 months) | ₱30,000/mo | ₱25,000 |
| Maternity leave 3 months (under SSS salary differential rules, scope varies) | ₱20,000/mo, 9 paid months basic | ₱15,000 |
Included vs excluded
Include: basic salary only.
Exclude (per DOLE Handbook): allowances and monetary benefits not considered part of basic salary — COLA, unused leave monetization, overtime, night differential, holiday pay, premium, commissions (unless commissions are part of the basic pay structure per policy/contract — common in sales jobs; check your employment contract).
The tax rule (₱90,000 threshold)
13th month pay and other benefits are tax-exempt up to ₱90,000 combined (TRAIN law). Above that, the excess joins taxable compensation. Practical cases:
- Basic ₱18,000/mo → 13th month ₱18,000 — fully exempt.
- Basic ₱100,000/mo → 13th month ₱100,000 → ₱10,000 is taxable (added to December compensation).
Deadlines and rules that bite
- December 24 — statutory deadline for payment (DOLE Labor Advisory reminders come out every November).
- Pro-rated for resignation, termination, retirement within the year — payable with final pay.
- Exempt employees: government workers under specific schemes, purely commission-based workers paid on output without basic salary, employers with fewer than 10 employees may be exempt from coverage (but almost all pay it anyway as standard practice).
- Not payable twice: 13th month ≠ Christmas bonus. The bonus is discretionary; 13th month is a statutory right.
Employer's practical checklist
- Total each employee's basic pay Jan 1–Dec 24 (exclude leaves without pay from the numerator).
- Divide by 12; add to December payroll with the ₱90k exemption applied.
- Reflect it on the December payslip as a separate line.
- Keep the computation — employees will ask, and DOLE inspections do too.
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