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How 13th month pay is computed
One formula from Presidential Decree 851 — and one tax ceiling from the TRAIN law.
Total the basic salary
Add up all basic salary actually earned during the calendar year. Overtime, allowances, and monetized leave are excluded.
Divide by 12
Total basic salary ÷ 12 = 13th month pay. A full year of work yields exactly one month's basic pay; partial years prorate automatically.
Check the ₱90,000 ceiling
13th month pay plus other bonuses is tax-exempt up to ₱90,000 per year. Only the excess is taxed.
13th Month Pay Proration Table
Sample amounts at a ₱20,000 monthly basic salary — the pattern scales to any salary.
| Months worked | Total basic earned | 13th month pay |
|---|---|---|
| 1 month | 20,000.00 | 1,666.67 |
| 3 months | 60,000.00 | 5,000.00 |
| 6 months | 120,000.00 | 10,000.00 |
| 9 months | 180,000.00 | 15,000.00 |
| 11 months | 220,000.00 | 18,333.33 |
| 12 months (full year) | 240,000.00 | 20,000.00 |
No SSS, PhilHealth, or Pag-IBIG contributions are deducted from 13th month pay — only tax on any amount above the ₱90,000 annual bonus ceiling.
Frequently asked questions
Straight answers to the questions people actually search for.
How is 13th month pay computed?
Total basic salary earned during the calendar year, divided by 12. An employee who worked the full year at an unchanged salary receives exactly one month's basic pay. Fewer months worked means a proportionate amount — for example, six months of work earns half a month's salary.
Who is entitled to 13th month pay?
All rank-and-file employees in the private sector who worked at least one month during the calendar year, under Presidential Decree 851 — regardless of position title, employment status, or how wages are paid. Managerial employees are not covered by the law, though many companies extend it voluntarily.
When is 13th month pay released?
On or before December 24 each year. Employers may pay half earlier (commonly in June) and the balance in December.
Is 13th month pay taxable?
It is tax-exempt up to ₱90,000, combined with other bonuses and benefits received during the year. Only the amount above ₱90,000 is added to taxable income. The ₱90,000 ceiling was set by the TRAIN law and remains in force for 2026.
Do resigned or terminated employees get 13th month pay?
Yes — prorated to the months actually worked during the year, released as part of final pay. Overtime pay, allowances, and unused leave conversions are excluded from the computation; only basic salary counts.
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