13th Month Pay in the Philippines: How It's Computed and What to Do With It
Your 13th month pay is your total basic salary earned this calendar year, divided by 12, and your employer must release it on or before December 24. If you worked the whole year at ₱20,000 a month, that's ₱20,000. If you started in July, it's roughly half.
Below: the exact formula, what's excluded, the ₱90,000 tax rule, what happens if you resigned, and a plan so the money survives past New Year's Eve. Use the 13th month pay calculator if you'd rather skip the arithmetic.
The 13th month pay formula
Presidential Decree No. 851 requires every private-sector employer to pay rank-and-file employees a 13th month pay of not less than one-twelfth (1/12) of the total basic salary earned within the calendar year. DOLE restates the rules every November in a labor advisory; the current one is Labor Advisory No. 16, Series of 2025 (DOLE Bureau of Working Conditions).
13th month pay = total basic salary earned from January 1 to December 31 ÷ 12
"Basic salary" is your pay for the work you do. It does not include:
- Overtime pay, holiday pay and night shift differential
- Allowances (transport, meal, rice, clothing) unless your contract treats them as part of basic pay
- Commissions and incentives, unless they're part of your fixed wage
- Cash value of unused leave
Absences without pay reduce the base. If you were docked ₱3,000 in March for unpaid leave, your "total basic salary earned" is ₱3,000 lower.
Worked examples
| Situation | Basic salary earned this year | 13th month pay |
|---|---|---|
| Full year at ₱20,000/month | ₱240,000 | ₱20,000 |
| Full year at ₱35,000/month | ₱420,000 | ₱35,000 |
| Started June 1 at ₱25,000/month (7 months) | ₱175,000 | ₱14,583 |
| Full year at ₱18,000, but ₱6,000 of unpaid absences | ₱210,000 | ₱17,500 |
| Daily-paid, ₱645/day, 260 paid days | ₱167,700 | ₱13,975 |
The "divide by 12" rule holds even when you worked fewer than 12 months. That's why a July hire gets about half: the total earned is smaller, the divisor stays the same.
- Regular kinsenas₱9,150
- 13th month₱20,000
Who gets it, and who doesn't
Entitled: all rank-and-file employees in the private sector who worked at least one month during the year, regardless of status (regular, probationary, contractual, project-based) or how they're paid (monthly, daily, piece-rate). Kasambahay are covered under the Batas Kasambahay (RA 10361).
Not automatically entitled: managerial employees (though most companies pay them anyway), government employees (they get a year-end bonus under a different law), and freelancers or independent contractors, because there's no employer-employee relationship. If you're a VA paid per project, this article's budgeting section still applies; the legal entitlement doesn't.
Is 13th month pay taxable?
The first ₱90,000 of 13th month pay and other benefits combined is tax-exempt under the TRAIN law (RA 10963). Anything above ₱90,000 is added to your taxable income. For most kinsenas earners this means the full amount lands in your account untaxed. If you earn ₱90,000 a month, part of your 13th month pay will be taxed.
Resigned or terminated before December?
You still get it, prorated, as part of your final pay. Final pay (including prorated 13th month) should be released within 30 days of separation under DOLE Labor Advisory No. 06-20. Example: resigned August 31 after earning ₱160,000 that year → ₱13,333.
Can your employer pay it in halves, or late?
Paying half in May or June and half in December is allowed and common. Paying after December 24 is not; there is no exemption or deferment, and DOLE field offices monitor compliance each December. If it hasn't landed by December 26, send a written request for the computation and release date, then file with the nearest DOLE field office if needed.
What to do with your 13th month pay (the kinsenas way)
Most 13th month pay is gone by January 5. Not because people are careless, but because December has two paydays, a bonus, and six weeks of expenses pretending to be one.
Split it the day it lands, before it mixes with your sahod:
| Jar | Share | ₱20,000 example | What it's for |
|---|---|---|---|
| Bayarin | 30% | ₱6,000 | Utang, the credit card, anything charging you interest |
| Ipon | 40% | ₱8,000 | Emergency fund first; then a named goal (January rent, tuition in June) |
| Pasko | 30% | ₱6,000 | Noche Buena, aguinaldo, gifts, the office exchange gift |
If you have no utang, move that 30% to ipon. If your emergency fund already covers two months of expenses, move some to the goal jar. The point is the order: obligations, future-you, then the party.
Miming says: Treat your 13th month like a 13th cut-off, not a jackpot. Your regular kinsenas budget still runs on December 15 and 30. The bonus is extra; it shouldn't become the budget.
- Bayarin · credit card₱6,000
- Ipon · emergency fund₱8,000
- Pasko · Noche Buena + gifts₱6,000
Quick checklist before December 24
- ☐ Add up your basic salary from January payslips, not your gross
- ☐ Subtract unpaid absences, ignore overtime and allowances
- ☐ Divide by 12 and compare with what HR releases
- ☐ If you resigned this year, check your final pay included the prorated amount
- ☐ Decide the three-jar split before it lands
Frequently asked questions
When is the deadline for 13th month pay?
December 24 of each year. Employers may release half earlier (usually May or June) but the full amount must be paid by December 24. There is no legal extension, and a January release is already late.
How do I compute 13th month pay if I started mid-year?
Add up every month's basic salary you actually earned, then divide by 12, not by the number of months worked. Someone who started in July at ₱25,000 earned ₱150,000 and gets ₱12,500.
Is 13th month pay the same as a Christmas bonus?
No. 13th month pay is mandatory under PD 851. A Christmas bonus is voluntary and depends on company policy. Some employers give both; only the 13th month is enforceable.
Are allowances included in 13th month pay?
Usually not. Overtime, holiday pay, night differential, and allowances such as transport or meal are excluded unless your contract defines them as part of basic salary.
Is 13th month pay taxable in the Philippines?
Only the portion above ₱90,000, counting 13th month pay and other benefits together. Below that threshold, it's tax-exempt under the TRAIN law.
Do freelancers and VAs get 13th month pay?
Not by law. 13th month pay requires an employer-employee relationship. Clients may give a bonus voluntarily, but independent contractors can't claim it under PD 851.
Check your number in 20 seconds
Enter your monthly basic pay and your start date and the 13th month pay calculator shows your amount, the prorated version if you resigned, and the three-jar split. When it lands, list it with Miming so it doesn't quietly become your December sahod.
Sources: Presidential Decree No. 851; DOLE Labor Advisories (Labor Advisory No. 16, s. 2025); Philippine News Agency on DOLE's December reminder. Republic Act No. 10963 (TRAIN) for the ₱90,000 threshold. This article is general information, not legal or tax advice.