Every payday, your payslip shows a number that’s lower than what your contract says. That gap — between your gross salary and your actual take-home pay — isn’t a mistake. It’s the result of four mandatory deductions that every employed Filipino pays every single month.
In this guide, I’ll break down exactly what those deductions are, how each one is computed, and how much you can expect to actually receive based on your salary. And if you just want the numbers fast, I’ve built a calculator for that too.
Gross Salary vs. Net Salary
Before anything else, let’s clear up the terminology:
Gross salary is the amount your employer agreed to pay you — the number on your employment contract.
Net salary (or take-home pay) is what actually gets deposited in your account after deductions.
The difference between the two comes from mandatory government contributions and withholding tax, which we’ll go through one by one.
The Four Mandatory Deductions
1. SSS Contribution
The Social Security System (SSS) uses a total contribution rate of 15%, split between you and your employer. As an employee, you pay 5% — your employer covers the remaining 10%.
Your contribution isn’t based on your exact salary, though. SSS uses a Monthly Salary Credit (MSC) — a bracketed value assigned based on your monthly pay. The minimum MSC is ₱5,000 and the maximum is ₱35,000. So even if you earn ₱50,000 a month, your SSS is computed on ₱35,000.
Example: Basic salary of ₱30,000 → MSC of ₱30,000 → SSS contribution = ₱30,000 × 5% = ₱1,500
2. PhilHealth Contribution
PhilHealth’s premium rate is 5% of your basic salary, shared equally between you and your employer. Your share is 2.5%.
There’s a floor and a ceiling: if your basic salary is below ₱10,000, it’s computed as if it’s ₱10,000. If it’s above ₱100,000, the contribution doesn’t increase further.
Example: Basic salary of ₱30,000 → PhilHealth = ₱30,000 × 2.5% = ₱750
3. Pag-IBIG / HDMF Contribution
Your Pag-IBIG contribution is 2% of your monthly salary, matched by your employer — but your share is capped at ₱200 per month, no matter how high your salary is.
Example: Basic salary of ₱30,000 → Pag-IBIG = ₱200 (capped)
4. Withholding Tax
This is the big one that varies the most from person to person. Withholding tax is your income tax pre-collected by your employer on behalf of the BIR.
But it’s not computed on your gross salary. The BIR first lets you subtract your mandatory contributions — and any de minimis benefits you receive — before applying the tax brackets.
Taxable income = Gross compensation − De minimis − SSS − PhilHealth − Pag-IBIG
Your taxable income is then run through the TRAIN Law graduated brackets (effective January 2023, still in force for 2026):
| Annual Taxable Income | Tax Due |
|---|---|
| Up to ₱250,000 | 0% |
| ₱250,001 – ₱400,000 | 15% of excess over ₱250,000 |
| ₱400,001 – ₱800,000 | ₱22,500 + 20% of excess over ₱400,000 |
| ₱800,001 – ₱2,000,000 | ₱102,500 + 25% of excess over ₱800,000 |
| ₱2,000,001 – ₱8,000,000 | ₱402,500 + 30% of excess over ₱2,000,000 |
| Over ₱8,000,000 | ₱2,202,500 + 35% of excess over ₱8,000,000 |
The bracket rate only applies to the portion of income that falls within that bracket — not your entire taxable income.
What Are De Minimis Benefits?
De minimis benefits are small, non-taxable perks your employer gives you on top of your basic salary — things like rice subsidy, uniform allowance, and medical cash allowance. As long as they stay within the BIR-prescribed limits under RR No. 29-2025 (effective January 6, 2026), they’re completely exempt from income tax.
This means de minimis benefits don’t just add to your pay — they also reduce your taxable income, which lowers your withholding tax.
Common de minimis benefits and their 2026 monthly limits:
- Rice subsidy — up to ₱2,500/month
- Uniform/clothing allowance — up to ₱8,000/year (≈ ₱667/month)
- Medical cash allowance to dependents — up to ₱2,000/semester (≈ ₱333/month)
- Laundry allowance — up to ₱600/month
Any amount above these limits becomes taxable compensation.
Sample Computation: ₱30,000 Basic Salary with Rice Subsidy
Let’s say you earn ₱30,000 in basic salary and receive a ₱2,500 monthly rice subsidy (de minimis).
Step 1: Gross compensation
₱30,000 basic + ₱0 other taxable income = ₱30,000Step 2: Contributions (based on basic salary)
| SSS | ₱1,500 |
| PhilHealth | ₱750 |
| Pag-IBIG | ₱200 |
| Total contributions | ₱2,450 |
Step 3: Taxable income
₱30,000 − ₱2,500 (rice subsidy) − ₱2,450 (contributions) = ₱25,050
Annual equivalent: ₱25,050 × 12 = ₱300,600Step 4: Withholding tax
₱300,600 falls in the 15% bracket (₱250,001–₱400,000):
(₱300,600 − ₱250,000) × 15% = ₱50,600 × 15% = ₱7,590/year
₱7,590 ÷ 12 = ₱632.50/monthStep 5: Net pay
₱30,000 basic + ₱2,500 rice subsidy − ₱2,450 contributions − ₱632.50 tax
= ₱29,417.50 estimated net payNotice that even though your basic is ₱30,000, the rice subsidy adds to your take-home without adding to your tax.
Use the Calculator
Rather than crunching these numbers manually every time, just use our Philippine Net Salary Calculator — it handles all of this automatically based on 2026 rates. You can input your basic salary, other taxable income, and de minimis benefits, and it will show you a full breakdown of every deduction.
👉 Compute your net salary here →
Frequently Asked Questions
Is the ₱250,000 tax exemption per month or per year?
It’s per year. That works out to roughly ₱20,833 per month. If your monthly taxable income stays at or below that amount, your withholding tax is zero.
What’s the difference between basic salary and gross salary?
Your basic salary is the fixed pay in your contract. Gross compensation includes your basic plus any other earnings — allowances, commissions, overtime. SSS, PhilHealth, and Pag-IBIG contributions are based on your basic salary.
Does my employer also contribute?
Yes. For every peso you put in to SSS, PhilHealth, and Pag-IBIG, your employer adds their matching share. That money still goes to your record — you just don’t see it on your payslip because it’s the employer’s separate expense.
Are all allowances taxable?
Not necessarily. Allowances that qualify as de minimis benefits (within BIR limits) are non-taxable. Allowances that don’t qualify — or exceed the limits — are treated as taxable compensation and included in your withholding tax computation.
What if I have commissions or other variable pay?
Those count as other taxable income and should be added on top of your basic salary before computing withholding tax. The calculator has a field for this.
Blogger’s Corner
Understanding your payslip is one of those adulting milestones that nobody really teaches you — you’re just expected to figure it out on your own. But once you know where every peso goes, it becomes a lot easier to plan around it.
If you’ve ever wondered whether your withholding tax is being computed correctly, or why your take-home feels lower than expected, hopefully this guide gives you the clarity to check it yourself. And if the math feels like too much, that’s what the calculator is for.
Disclaimer: This article is based on 2026 mandated government rates (SSS, PhilHealth, Pag-IBIG) and the TRAIN Law withholding tax schedule effective January 2023, along with BIR RR No. 29-2025 for de minimis benefits. Actual deductions may vary depending on your specific payroll setup. Consult your HR department or a licensed CPA for a precise computation.