Step 1: Determine Gross Pay
Your gross pay is your total regular earnings for the period before any deductions. Gross pay may include basic pay, allowances, overtime and other earnings. For the linked basic-pay calculator, use regular basic pay only; its simplified model does not handle additional earnings.
Step 2: Calculate Mandatory Employee Contributions
The government requires deductions for three main agencies:
1. SSS: Based on the official contribution schedule (effective Jan 2025). The employee share is 5% of your matching Monthly Salary Credit (up to a ₱35,000 cap).
2. PhilHealth: 5% of your Monthly Basic Salary (with a ₱10,000 floor and ₱100,000 ceiling), split 50/50 between employer and employee (so the employee pays 2.5%).
3. Pag-IBIG: 1% of fund salary at PHP 1,500 or below and 2% above PHP 1,500, with a PHP 10,000 Maximum Fund Salary and a PHP 200 maximum regular employee share.
Step 3: Compute Taxable Compensation
A common misconception is that tax is computed on your full gross pay. According to the BIR (RMC 50-2018), mandatory employee contributions (SSS, PhilHealth, Pag-IBIG) are deductible to arrive at your taxable compensation.
For a basic-pay-only example with no other exempt items: Taxable Compensation = Gross Pay — Mandatory Employee Contributions. Qualified exempt benefits and other allowable deductions may also affect the tax base; ask payroll to classify them.
Step 4: Determine Withholding Tax
Find your pay frequency (monthly or semi-monthly) and look up your Taxable Compensation in the BIR Annex E withholding tax table. The table will give a base amount plus a percentage of the excess over the bracket threshold.
Step 5: Calculate Final Take-Home Pay
Formula: Take-Home Pay = Gross Pay — (Mandatory Contributions + Withholding Tax)
Remember that real-world payslips might have additional non-statutory deductions like company loans, union dues, or HMO premiums, which will further lower your net pay.
Frequently asked questions
Is 13th month pay included in this computation?
13th month pay is computed separately. Its tax exemption shares a PHP 90,000 annual ceiling with other covered benefits, so the entire amount is not automatically exempt.
Why does my company compute tax differently?
Companies may factor in non-taxable allowances, de minimis benefits, or use annualized withholding methods near the end of the year, which can result in different per-paycheck tax amounts.
Official Sources
- SSS Circular 2024-006: employed-member schedule effective January 2025
Official compensation brackets, employee and employer shares, EC and mandatory provident fund.
- PhilHealth Advisory 2025-0002: premium schedule and basic salary definition
CY 2025 schedule: 5%, with a PHP 10,000 floor and PHP 100,000 ceiling. Check for later agency advisories.
- Pag-IBIG Circular 460: registered official copy at UP Law Center
Rates and the PHP 10,000 Maximum Fund Salary effective February 2024; includes the definition of fund salary.
- BIR Annex E: withholding tables effective January 2023 onwards
Separate monthly and semi-monthly compensation tables.
- BIR RMC 50-2018: compensation deductions and shared benefit exemption
See the compulsory employee contribution rule and the shared PHP 90,000 ceiling. Use later issuances for current de minimis amounts.
Keep exploring
Salary Calculator
Estimate take-home pay from regular basic salary after employee SSS, PhilHealth, Pag-IBIG and withholding tax.
Gross Pay vs Taxable Compensation
Understand what part of your salary actually gets taxed.
Monthly vs Semi-Monthly
Learn why semi-monthly tax is not always exactly half of monthly tax.
Salary Deductions
Hub for calculators and references covering SSS, PhilHealth, Pag-IBIG, withholding tax, and 13th month pay.