De minimis benefits are a particular set of monetary benefits that employers voluntarily give to rank-and-file and managerial employees in the Philippines that are not subject to withholding tax and income tax on compensation income.
Since they are tax-exempt, de minimis benefits reduce an employee’s income tax and increase their take-home pay.
You might be receiving de minimis benefits from your employer but not aware of it, probably because they’re not called as such. On payslips, they’re often labeled as “allowance” or “subsidy.”
It’s important to know which benefits you’re receiving qualify as de minimis benefits and thus are free from taxes. This way, you can check if your employer computes, withholds, and pays your taxes properly.
Note that there’s a prescribed maximum amount that’s tax-exempt per de minimis benefit. For example, the maximum amount for clothing allowance is Php 5,000 per year. If you’re receiving a Php 300 clothing allowance per month, the entire amount is tax-exempt.
However, if you’re paid Php 500 or higher for your clothing allowance per month, then the excess of Php 5,000 total in a year is already subject to tax, which means it’s included in the taxable income computation.
To compute your withholding tax (taking into consideration the correct amount of your de minimis benefits), you can use the BIR tax calculator.
Here are the de minimis benefits in the Philippines and their respective prescribed maximum amounts.
|De Minimis Benefit||Prescribed Maximum Amount|
|Monetized vacation leave of employees in the private sector||Worth 10 days of salary|
|Monetized leave credits paid to government employees||N/A|
|Medical cash allowance to employees’ dependents||Php 750 per employee per semester or Php 125 per month|
|Rice subsidy||Php 1,500 per month or one sack of 50kg rice per month|
|Uniform and clothing allowance||Php 5,000 per year|
|Annual medical benefits||Php 10,000 per year|
|Laundry allowance||Php 300 per month|
|Employee achievement award||Php 10,000|
|Gifts are given to employees during Christmas and major company anniversary celebration||Php 5,000 per year|
|Daily meal allowance for overtime work||25% of the basic minimum wage|
Go back to the main article: How to Compute Your Income Tax Using the New BIR Tax Rate Table