13th Month Pay Calculator Philippines 2026

How 13th month pay works in the Philippines

The 13th month pay is a mandatory benefit in the Philippines under Presidential Decree 851, signed by President Ferdinand Marcos Sr. in 1975. It requires all private-sector employers to pay their rank-and-file employees a sum equivalent to at least one-twelfth (1/12) of the total basic salary earned during the calendar year, on or before December 24 each year.

Unlike a discretionary bonus, the 13th month is a legal entitlement — not a gift. Refusal to pay is a labor standards violation enforceable by DOLE. Employers who fail to comply can be fined and ordered to pay back wages plus damages.

Who is covered

All rank-and-file employees who have worked at least one month in the calendar year are covered, regardless of:

• Employment status (regular, probationary, contractual, project-based)
• Method of payment (monthly, daily, piece-rate, commission-based)
• Date of hire (those hired mid-year receive a prorated amount)

The main exclusions are managerial employees, government employees (who receive a separate bonus and cash gift), household helpers, personal service workers paid purely on commission, and employees of strictly distressed employers granted DOLE exemption.

What counts as “basic salary”

This is the most common source of confusion. The 13th month is computed on basic salary only. The following are normally excluded:

• Overtime pay and night shift differential
• Holiday premium pay (the 200% / 130% top-ups on holiday rates)
• Cost-of-living allowances (COLA) and transportation allowance
• Meal subsidies and clothing allowance
• Cash conversion of unused vacation and sick leaves
• Commissions (treatment depends on pay structure — see below)
• Christmas bonus, performance bonus, and other discretionary bonuses

Commission-based compensation: a nuanced case

The treatment of commissions for 13th month pay depends heavily on how your compensation is structured. The Supreme Court of the Philippines and DOLE have ruled on this in multiple decisions, with three broad scenarios:

• Purely commission-based(no guaranteed wage, income depends entirely on sales): generally excluded from PD 851 under the “workers paid by results” exception.
• Fixed basic wage + commissions (most common in retail, real estate, and sales): the employee is entitled to 13th month pay computed on the basic wage component only, not the commission.
• Commissions as integral part of basic wage (rare; when the employment contract or company policy explicitly treats commissions as part of the base compensation): the commissionsmay be included in the 13th month computation. Case law varies — consult DOLE or a labor lawyer.

Safe default if your contract is unclear: compute on the fixed basic wage only. If you believe commissions should be included based on your contract or company practice, document the arrangement and request clarification from your HR or file an inquiry with the DOLE Bureau of Working Conditions.

Prorated computation

For employees who did not work the full year, the formula remains the same — total basic salary earned ÷ 12 — but the total naturally reflects the months actually worked. Example: an employee hired in July 2026 at ₱25,000/month who works through December earns ₱25,000 × 6 = ₱150,000 of basic salary. The 13th month is ₱150,000 ÷ 12 = ₱12,500.

Use the Detailed mode of the calculator above if you had salary changes, unpaid leave, or partial-month employment. Enter the actual basic salary earned each month, and the calculator sums and divides by 12.

Taxation under TRAIN Law

Section 32(B)(7)(e) of the Tax Code, as amended by the TRAIN Law (RA 10963 of 2017), exempts 13th month pay and other benefits up to ₱90,000 per calendar year. The ceiling is shared with other taxable benefits such as the Christmas bonus, productivity incentives, and de minimis benefits above the prescribed limits.

Example: if your 13th month is ₱70,000 and you also receive a ₱30,000 Christmas bonus, the combined ₱100,000 exceeds the ceiling by ₱10,000. That ₱10,000 is subject to withholding tax based on your tax bracket. The first ₱90,000 remains tax-free.

Frequently asked questions