With the upcoming holiday season, It is definitely the season to be jolly as we await our 13th month pay and other Christmas bonuses. But before we get excited about our long-awaited bonuses, we need to know first which ones are considered taxable and non-taxable.
While Christmas bonuses are generally voluntary and non-taxable, the 13th month pay is a legally mandated benefit and is now non-taxable to a certain threshold thanks to the TRAIN Law. This legislation, which took effect last January 2018, has increased the ceiling for tax exemption on 13th month pay and other employer incentives from Php 82,000 to Php 90,000. This means that bonuses, as well as fringe, de minimis benefits, and other benefits will only be subject to income tax if their aggregate value exceed the allowable amount of Php 90,000.
As good as they get, bonuses are indeed a well-deserved gift for hardworking employees every December. But just like other forms of compensation, we need to spend them wisely and make sure that applicable taxes are filed accordingly so we can enjoy Christmas in its full festive spirit.
Read more about fringe and de minimis benefits here:
https://mpca.com.ph/fringe-benefits-under-philippine-taxation/
https://mpca.com.ph/de-minimis-benefits/
