Payroll in the Philippines 2026: SSS, PhilHealth, Pag-IBIG, tax

In the Philippines the employer withholds income tax on compensation using the BIR's withholding tax tables and deducts the employee's shares of SSS (5%), PhilHealth (2.5%) and Pag-IBIG (2%). On top of salary the employer pays SSS of 10% plus the Employees' Compensation (EC) contribution, PhilHealth of 2.5% and Pag-IBIG of 2%, and a 13th month pay by 24 December.

Philippine payroll at a glance

SSS, PhilHealth and Pag-IBIG

SSS. Under the Social Security Act of 2018, the contribution rate reached 15% in January 2025, with a minimum monthly salary credit (MSC) of ₱5,000 and a maximum of ₱35,000 (SSS Circular 2024-006). The SSS schedule maps each range of compensation to an MSC in ₱500 steps: pay below ₱5,250 uses ₱5,000, and pay of ₱34,750 or more uses ₱35,000. At the top the employee pays ₱1,750 and the employer ₱3,500 plus ₱30 EC. Benefits from the regular programme are based on an MSC of up to ₱20,000; contributions on the part of the MSC above ₱20,000 go to the employee's own Mandatory Provident Fund account.

PhilHealth. Under the Universal Health Care Act schedule, the premium reached 5% of monthly basic salary in 2024, with an income floor of ₱10,000 and a ceiling of ₱100,000, so a premium of ₱500 to ₱5,000 a month, split equally. Basic salary excludes commissions, overtime, allowances, the 13th month pay and bonuses. PhilHealth's latest published schedule lists these values for 2024 to 2025; check for a newer circular. Unpaid premiums carry interest of at least 3% a month, compounded, for employers.

Pag-IBIG. Since February 2024 (HDMF Circular 460) the maximum monthly fund salary is ₱10,000: the employee pays 2% (1% if the fund salary is ₱1,500 or less) and the employer 2%, so at most ₱200 each. The employer's share cannot be deducted from the employee's pay.

Income tax on compensation

The TRAIN law's schedule applies to compensation earned from 2023 onwards:

How withholding works. Each payday the employer takes the employee's taxable regular compensation for the payroll period, after excluding non-taxable benefits and the employee's mandatory SSS, PhilHealth and Pag-IBIG contributions and union dues, and applies the BIR withholding tax table for that payroll period (daily, weekly, semi-monthly or monthly) for compensation paid from 1 January 2023. At the end of the year the employer recomputes the tax on the annual compensation and withholds any shortfall or refunds any excess.

Exemptions. Minimum wage earners are exempt on the statutory minimum wage and on their holiday pay, overtime pay, night shift differential and hazard pay. The 13th month pay and other benefits are exempt up to ₱90,000 a year in total; the excess is taxable.

Substituted filing. An employee with compensation income from a single employer, whose tax withheld equals the tax due, does not file an annual return: the BIR Form 2316 issued by the employer serves as the return.

Minimum wage, working time and mandatory pay

Minimum wages are set by region through wage orders of the Regional Tripartite Wages and Productivity Boards. In the National Capital Region, Wage Order NCR-28 sets ₱755 a day for non-agriculture workers and ₱718 for agriculture from 26 September 2026. An earlier order, NCR-27, which would add a second step to ₱780 and ₱743 from 20 January 2027, is awaiting the resolution of court cases. Check the wage order of the region where each employee works.

13th month pay. Presidential Decree 851 and its rules require a 13th month pay of one-twelfth of the basic salary earned in the calendar year, paid no later than 24 December.

Working time and premiums. Normal hours are 8 a day. Under the Labor Code:

• overtime is paid at the regular wage plus at least 25%
• work on a rest day or special day earns at least 30% more, and at least 50% more on a special day that is also the rest day
• work on a regular holiday is paid at twice the regular rate
• each hour between 10 pm and 6 am earns a night shift differential of at least 10%
• after one year of service an employee is entitled to five days of service incentive leave with pay, unless already given at least five days of paid vacation leave or employed in a small establishment that is exempt

Monthly payroll calendar and filings

Before the first payroll: register as a withholding agent with the BIR and as an employer with the SSS, PhilHealth and the Pag-IBIG Fund, and collect each new employee's TIN and membership numbers.

Every month: file BIR Form 1601-C, the monthly remittance return of income taxes withheld on compensation, and remit the SSS, PhilHealth and Pag-IBIG contributions with the employee lists each agency requires, by the deadlines for your filing channel and employer number.

Every year:

The employer keeps its copy of each Form 2316 for ten years. Pay the 13th month pay by 24 December.

Worked example: ₱40,000 a month

An employee in Metro Manila earns a basic salary of ₱40,000 a month, with no allowances.

Contributions: pay of ₱34,750 or more uses the maximum MSC of ₱35,000, so SSS is ₱1,750 for the employee and ₱3,500 plus ₱30 EC for the employer. PhilHealth is 5% × 40,000 = ₱2,000, split ₱1,000 each. Pag-IBIG is 2% of ₱10,000 = ₱200 each.

Tax: taxable compensation is 40,000 − 2,950 = ₱37,050 a month, or ₱444,600 a year. Annual tax: ₱22,500 + 20% × (444,600 − 400,000) = ₱31,420, or ₱2,618.33 a month.

On top, a full year's 13th month pay is ₱40,000 (₱3,333.33 a month if you accrue it), tax-exempt because it stays within ₱90,000.

Common mistakes

1. 1Using the 2018 to 2022 withholding tables instead of the tables for compensation paid from 1 January 2023.
2. 2Computing tax before deducting the employee's SSS, PhilHealth and Pag-IBIG contributions.
3. 3Capping SSS at an old maximum instead of the ₱35,000 MSC, or forgetting the EC contribution.
4. 4Basing PhilHealth on gross pay instead of monthly basic salary within the ₱10,000 to ₱100,000 range.
5. 5Paying the 13th month pay late or taxing it within the ₱90,000 exemption.
6. 6Using the wrong region's wage order, or missing the NCR rate in force since 26 September 2026.

For a smooth month-end, see our month-end close checklist.

How Clientlly helps

Clientlly ships a built-in payroll profile for the Philippines: the TRAIN schedule converted to monthly bands, SSS at 5% and 10% on the ₱5,000 to ₱35,000 salary credit, PhilHealth at 2.5% each within the ₱10,000 floor and ₱100,000 ceiling, Pag-IBIG at 2% each up to ₱10,000, and the deductibility of these contributions, checked against official sources on 1 October 2026. It calculates gross to net and the employer contributions, produces payslips, supports recurring payroll adjustments, and imports employees and payroll data; an administrator can adjust the rates in the payroll tax settings. The profile models one employee in a primary job, single, without dependants, at national level, so the EC contribution, regional minimum wages, the minimum wage earner and 13th month exemptions and personal circumstances must be checked.

The Clientlly HR module also handles leave requests and approvals with a leave calendar and keeps HR documents in one place, and attendance and time tracking records hours and overtime for you to review before payroll.