Is 13th month pay and bonus taxable?

Is 13th month pay and bonus taxable?

We let them know that the 13th month pay is tax-free up to PHP 90,000, and any amounts above that are taxable and the tax would be deducted from the final payment. The tax-free amount of PHP 90,000 also includes ‘other equivalent benefits’ like commissions and bonuses that have to factor into the calculation.

Is 13th month pay taxable?

The 13th month pay is generally exempt from taxation. The amendment stipulates that the 13th month pay and other equivalent benefits shall not be subject to tax for a maximum of P90,000. This new amount is a relative increase from the previous tax exclusion rate of P82,000.

Is bonus paid taxable?

Any amount received in the form of a bonus from your employer will be considered part of your salary and taxed as such. Whereas, any gift from the employer is treated as a taxable salary if the total sum exceeds ₹5,000.

Is 13th month pay considered a bonus?

The thirteenth monthly salary is not a bonus, but a delayed payment. Whether or not a thirteenth salary is paid is part of an employment contract; some companies pay a higher monthly salary instead of the additional payment. In the first and last years of employment, the thirteenth salary is prorated for partial years.

Is the 13th month pay the same as the Christmas bonus?

The only shared similarities that they have is that they are both monetary and given out by employers. To start things off, the main difference between 13th Month Pay and Christmas bonus (also referred to as company bonus) is that one of the employees are entitled to, while the other is a given out of generosity.

How much do you get paid in the 13th month?

The 13th month pay shall not be less than 1/12 of the total basic salary earned by an employee within a calendar year. To illustrate: Are maternity leave benefits included in the computation of 13th month pay?

Is the 13th month pay exempt from tax in the Philippines?

Employers in the Philippines should understand the obligations around the 13th month pay and Christmas bonuses. The 13thmonth pay is exempt from tax, up to a limit of PHP 90,000 (US$1,778) and is mandatory, while the Christmas bonus is at the discretion of the employer.

How are Christmas bonuses taxed in the Philippines?

The taxation of Christmas bonuses must be split into two parts: non-performance-based bonuses (also known as ‘other benefits’) and performance-based incentives. ‘Other benefits’ fall into the same category as the 13 th month pay and are subject to the same PHP 90,000 limit (US$1,778).