Details about the 13th Month Pay & Tax Deduction
13TH MONTH PAY – Are you wondering if the total amount that you will receive as 13th month this December is subject to tax deduction?
Among the payouts all throughout the year, it is usually the December payout that most employees in the private sector are looking forward to. It is because the salary usually comes along with the 13th month pay and it is beneficial for a lot of reasons.
For most people, this payout is the one that helps them pay off the loans they have incurred in the previous months of the year. It also gives them a chance to treat their families and loved ones to good food during the holiday season. For parents, it is an opportunity to get their kids some gifts for Christmas.
Truth be told that weeks prior to the giving of the 13th month pay, many employees are already trying to compute the possible amount that they may get in December. Have you tried to calculate yours?
However, while many people can get an estimate of how much they may receive as 13th month pay, there are questions as to whether or not it is subject to tax deduction in the Philippines. Based on an article on Omnipresent, it is taxable depending on the amount that you will receive.
According to the article, if your 13th month pay is over P90,000, it is subject to tax. Otherwise, you will get it in full amount, tax-free.
Before the signing of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the threshold set for tax deduction was P82,000. The TRAIN Law has reduced the personal income taxes and raised the consumption taxes.
You may also visit – Are Retired Employees Entitled to 13th Month Pay? Here’s a guide…
