Workers from both public and private sectors will be getting bigger 13th month pay and yearend bonuses because of the law that raised the tax exemption cap of bonuses and benefits, said Senator Sonny Angara.
Pursuant to Republic Act 10653, the 13th month pay and other benefits, including productivity incentives and Christmas bonuses, are exempted from tax if they do not exceed P82,000.
Before RA 10653 was signed into law in 2015, only bonuses not exceeding P30,000 were tax-exempt.
Angara, who sponsored such law, commended the Department of Budget and Management for its recent announcement that government employees will receive their 14th month pay and P5,000 cash gift next week. The 13th month pay was already given in full last May.
“Because of this law, the 13th and 14th month pay and the other benefits of almost all government workers will not be deducted with taxes,” said Angara.
“Due to the bonus sa bonus, their take-home pay would be bigger,” said Angara, chairman of the ways and means committee.
Based on the DBM’s latest government manpower information system database, there are 1.1 million filled positions in the government.
Of the 1.1 million, approximately 1 million or nearly all government employees may receive tax-free 14th month pay. They are those with Salary Grade 18 and below or those with basic monthly salary of P38,000 and below.
If the tax exemption cap of the 13th month pay and other bonuses was not amended, only about 86,000 government employees—those with Salary Grade 6 and below or with basic monthly salary of P14,000 and below—may enjoy tax-free bonuses.
For private sector employees, the 13th month pay should be given not later than Dec. 24. It must be equivalent to one-twelfth (1/12) of the basic salary of an employee within a calendar year.
The senator reminded employers that they must pay their rank-and-file employees a 13th month pay regardless of the nature of their employment and whatever the method their wages are paid, provided they worked for at least one month during a calendar year.
“It’s not only the regular employees that should get 13th month pay. Even contractual, casual, fixed term, probationary, seasonal employees should also receive them under the Labor Code,” said Angara, who is also pushing for the passage of a bill that will lower the income tax rates of 99 percent of Filipino taxpayers.