Quick answer
13th month pay equals your total basic salary earned in the calendar year divided by 12. All rank-and-file private employees who worked at least one month in the year are entitled to it, regardless of how they are paid. It must be paid on or before December 24, and it is tax-free together with other bonuses up to ₱90,000 a year.
Key takeaways
- Formula: total basic salary actually earned from January to December ÷ 12.
- Basic salary excludes overtime, night differential, holiday premiums, allowances and unused leave conversions, unless your company includes them.
- Employees who resign or start mid-year get a pro-rated amount based on what they actually earned.
- Deadline: on or before December 24 (employers may pay half earlier, such as in June).
- 13th month pay and other benefits are tax-exempt up to ₱90,000 combined per year under the TRAIN law.
On this page
Every December, Filipino employees receive their 13th month pay, and every year the same questions come up: how is it computed, what if you resigned, and is it taxed? The rules come from Presidential Decree No. 851 and DOLE's implementing guidelines.
Who is entitled to 13th month pay?
All rank-and-file employees in the private sector who have worked at least one month during the calendar year, regardless of:
- employment status (regular, probationary, contractual, project-based)
- how they are paid (monthly, daily, piece-rate or a fixed amount plus commission)
- whether they resigned or were terminated during the year
Not covered by the law: government employees (who have their own year-end bonus), managerial employees, and certain household and family business arrangements. Kasambahay are covered under the Batas Kasambahay. Many companies voluntarily give managers a 13th month pay too.
The formula
13th month pay = total basic salary earned during the calendar year ÷ 12
Basic salary includes your regular pay and paid leaves you actually used. It excludes (unless your company policy or contract includes them):
- overtime pay
- night shift differential
- holiday and rest-day premium pay
- cost-of-living allowance (COLA) and other allowances
- cash conversions of unused leave
- profit-sharing and other bonuses
Examples
Full year, fixed monthly salary
Ana earns ₱22,000 a month and worked the whole year with no unpaid absences.
- Total basic salary: ₱22,000 × 12 = ₱264,000
- 13th month pay: ₱264,000 ÷ 12 = ₱22,000
Salary increase during the year
Ben earned ₱20,000 from January to June and ₱24,000 from July to December.
- Total: (₱20,000 × 6) + (₱24,000 × 6) = ₱264,000
- 13th month pay: ₱22,000
Unpaid absences
Carla earns ₱18,000 a month but had ₱3,000 in total salary deductions for unpaid absences.
- Total: ₱216,000 − ₱3,000 = ₱213,000
- 13th month pay: ₱17,750
Resigned mid-year (pro-rated)
Dan earned ₱25,000 a month and resigned effective June 30.
- Total: ₱25,000 × 6 = ₱150,000
- 13th month pay: ₱12,500, usually released with his final pay
Minimum-wage daily-paid worker
A Metro Manila worker paid the non-agriculture minimum of ₱755 a day (under Wage Order NCR-28, effective September 26, 2026) works 26 days a month. Before that order, the rate was ₱695.
- January to September 25 at ₱695: roughly ₱695 × 26 × 8.8 months ≈ ₱159,000
- September 26 to December at ₱755: roughly ₱755 × 26 × 3.2 months ≈ ₱62,800
- Total ≈ ₱221,800, so 13th month pay ≈ ₱18,480
Daily-paid workers should total their actual basic pay for days worked from payroll records for an exact figure.
When must it be paid?
On or before December 24 each year. Employers may pay it in two installments, such as half in May or June and half in December, as long as the full amount is paid by December 24. Employees who leave during the year receive their pro-rated 13th month pay with their final pay.
Is 13th month pay taxable?
Under the TRAIN law, 13th month pay and other benefits (Christmas bonus, productivity incentives, loyalty awards and similar) are tax-exempt up to ₱90,000 combined per year.
| Total bonuses in the year | Taxable portion |
|---|---|
| ₱25,000 (13th month only) | ₱0 |
| ₱90,000 (13th month + other bonuses) | ₱0 |
| ₱120,000 | ₱30,000 added to taxable income |
Only the excess over ₱90,000 is taxed, at your regular income tax rate. See how to compute income tax. Bills to raise the exemption have been filed in Congress, but the ₱90,000 limit is what applies as of this update.
SSS, PhilHealth and Pag-IBIG contributions are not deducted from 13th month pay.
What to do if your employer doesn't pay
- Check the computation with HR. Many disputes come from what counts as basic salary.
- Put your request in writing and keep a copy.
- If unresolved, file a request for assistance through DOLE's Single Entry Approach (SEnA), a free 30-day conciliation process, at the nearest DOLE office or online.
Non-payment of 13th month pay is a violation of labor standards.
Make your 13th month pay count
Before it disappears into holiday shopping, decide where it goes. A simple split:
- Pay down high-interest debt first. See how to get out of credit card debt.
- Top up your emergency fund. See how much you need.
- Fund a long-term goal such as MP2 or an index fund.
- Then enjoy a planned portion guilt-free.
Frequently asked questions
How do I compute my 13th month pay if I resigned in June?
Add up the basic salary you actually earned from January until your last day and divide by 12. If you earned ₱25,000 a month for 6 months, that is ₱150,000 ÷ 12 = ₱12,500. It is usually released with your final pay.
Are managers entitled to 13th month pay?
Presidential Decree No. 851 covers rank-and-file employees. Managerial employees are not legally entitled, although many companies give them a 13th month pay or equivalent bonus as company policy.
Is 13th month pay taxable?
It is tax-exempt up to ₱90,000 when combined with other bonuses and benefits such as productivity incentives and Christmas bonuses. Only the amount above ₱90,000 is added to your taxable income. Bills to raise the exemption have been filed, but as of this update the limit remains ₱90,000.
Do unpaid absences reduce 13th month pay?
Yes. Because the formula uses basic salary actually earned, unpaid absences and leave without pay reduce the total. Paid leaves, such as service incentive leave you used, count as basic salary earned.
Are commission-based and piece-rate workers entitled?
Workers paid on piece-rate basis are entitled, computed on their earnings. For commission-based workers, it depends on whether the commission forms part of basic salary; productivity-based commissions on top of a fixed wage are generally excluded.
Sources
Figures checked against these official and primary sources on October 4, 2026. Government rates and promos change, so confirm on the agency's site before you act.
- Presidential Decree No. 851, 13th Month Pay Law
- DOLE: Revised Guidelines on the Implementation of the 13th Month Pay Law
- Republic Act No. 10963, Tax Reform for Acceleration and Inclusion (TRAIN) Law
General information, not personal financial, tax or legal advice. See our editorial standards and disclaimer. Found an outdated figure? Email support@success.ph.