Formula and Computation of 13th Month Pay

"Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year. The minimum 13th month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year.

"Basic salary" shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances, profit-sharing payments, cash equivalent of unused vacation and sick leave credits, overtime pay, premium pay, night shift differential, holiday pay, and all allowances and monetary benefits which are not considered, or integrated as part of the regular or basic salary of the employee.

FORMULA AND COMPUTATION OF 13TH MONTH PAY

The 13th  month pay shall be paid not later than December 24 of every year. An employer, however, may give to his or her employees one-half (1/2) of the 13th month pay before the opening of the regular school year and the remaining half on or before December 24 of every year.

The BIR has issued Revenue Regulations No. 3-2015 implementing the Provisions of Republic Act No. 10653. "An act Adjusting the 13th Month Pay and Other Benefits Ceiling Excluded from the Computation of Gross Income for Purposes of Income Taxation.

Amending the provision on Revenue Regulations No. 2-98 - The amount of Thirty Thousand Pesos (P30,000.00), specifically referring to the total amount of 13th month pay and other benefits as one of the exclusions from gross compensation income received by an employee prescribed under the pertinent provisions, including the example computations of revenue Regulations (RR) No. 2-98, as amended, is hereby increased to "Eighty Two Thousand Pesos (P82,000.00)", pursuant to the provisions of RA No. 10653.

SOURCE: http://www.dole.gov.ph/files/LA%20012-13.pdf;  http://www.gov.ph/2015/02/12/republic-act-no-10653/ and http://www.gov.ph/1975/12/16/presidential-decree-no-851-s-1975/ and http://philippinetaxtalk.blogspot.com/2015/03/republic-act-no-10653-increase-of-total.html 

Republic Act No. 10653: Increase of the Total Amount of Exclusion to P82,000.00 for 13th Month Pay and Other Benefits from Gross Income under RR No. 3-2015

Recently, the Bureau of Internal Revenue finally issued the Revenue Regulations No. 3-2015 implementing the Provisions of Republic Act No. 10653. "An act Adjusting the 13th Month Pay and Other Benefits Ceiling Excluded from the Computation of Gross Income for Purposes of Income Taxation.

Amending the provision on Revenue Regulations No. 2-98 - The amount of Thirty Thousand Pesos (P30,000.00), specifically referring to the total amount of 13th month pay and other benefits as one of the exclusions from gross compensation income received by an employee prescribed under the pertinent provisions, including the example computations of revenue Regulations (RR) No. 2-98, as amended, is hereby increased to "Eighty Two Thousand Pesos (P82,000.00)", pursuant to the provisions of RA No. 10653.

The amount of P82,000.00 shall ONLY apply to the 13th month pay and other benefits prescribed under the provisions of section 2.78.1.(B)(11) of RR No. employee under an employer-employee relationship, such as basic salary and other allowances. It must be emphasized that this exclusion from gross income is not applicable to self-employed individuals and income generated from business.

The amount of P82,000.00 shall apply to the 13th month pay and other benefits paid or accrued beginning January 1, 2015.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202015/RR%20No%20%203-2015.pdf of the full text of Revenue Regulations No. 3-2015.