13th month pay: who gets it, how to compute, the DOLE report
The 13th month pay is a yearly benefit owed to rank-and-file employees under Presidential Decree 851. This guide is for the employer who has to pay it and report it. You will know who is covered, how to compute it for someone who did not work all year, when to pay, how much is tax-exempt, and what DOLE wants afterwards. Try the 13th month pay calculator.
Who gets it, and who does not
DOLE's Labor Advisory No. 16, series of 2025, says the 13th month pay is paid to rank-and-file employees in the private sector regardless of position, designation or employment status (DOLE Labor Advisory 16-25). The implementing rules require that the employee has worked at least one month during the calendar year (PD 851 rules, section 4).
The rules do not cover, among others: the government and its subdivisions (except corporations run as private subsidiaries), employers of household helpers, employers of those paid purely on commission, boundary or task basis (piece-rate workers are covered), and employers already paying the equivalent (PD 851 rules, section 3). Distressed employers need the Labor Secretary's prior authorization to be exempt (section 7).
How to compute it
The 13th month pay is one twelfth (1/12) of the basic salary earned in the calendar year (PD 851 rules, section 2(a)). For an employee who did not work the whole year, use what was actually earned:
13th month pay = total basic salary earned from January to the last month ÷ 12
Example: an employee earned ₱20,000 a month from March 1 to December 31, 10 months. Basic salary earned is ₱200,000, so the 13th month pay is ₱200,000 ÷ 12 = ₱16,666.67. The arithmetic is ours; the rule is the 1/12 above.
What counts as basic salary: "all remunerations or earnings paid by an employer to an employee for services rendered", but not cost-of-living allowances, profit-sharing, and allowances not integrated into regular pay (PD 851 rules, section 2(b)). Overtime and other remuneration that is not part of basic salary are excluded (supplementary rules, item 4). Pro-rated 13th month pay belongs in the final pay of an employee who leaves (DOLE, January 2026).
When to pay
Not later than December 24 every year (PD 851, section 1). The employer may pay half before the opening of the regular school year and the rest on or before December 24 (PD 851 rules, section 5). DOLE restated the December 24 date in its 2025 advisory (DOLE Labor Advisory 16-25).
Tax: the ₱90,000 ceiling
The 13th month pay and other benefits are exempt from income tax up to a total of ₱90,000 for the year, and the excess is taxable ([RA 10963, the TRAIN law](); RR 11-2018). The law lets the Secretary of Finance raise the amount by rules; we found no such rule when we checked on October 16, 2026, so check BIR's site before you compute. On the BIR Form 2316 the exempt part and the taxable excess go on different lines; see the 2316 employer guide.
The DOLE report
The implementing rules require every covered employer to report its compliance by January 15 of each year (PD 851 rules, section 8). The report says: the establishment's name, address and business; total employment; workers benefited; amount per employee; total amount; and the person giving the information (PD 851 rules, section 8). DOLE's report system accepts the 13th Month Pay Report online at reports.dole.gov.ph. We found DOLE's advisory for 2025 pay (deadline January 15, 2026); at the time of checking we found none for 2026 pay, so for the January 15, 2027 date we can state only the rule. Check DOLE's labor advisories in December. The DOLE 13th month pay compliance report page fills the report data; you submit it to DOLE yourself.
Non-payment is treated as a money claim (PD 851 rules, section 9).
Questions
Included ba ang overtime sa 13th month computation? No. Overtime and other earnings that are not part of basic salary are excluded (supplementary rules).
What if I hired someone in March? Pay one twelfth of what they earned, as in the example above (PD 851 rules, section 2(a)), as long as they worked at least one month in the year.
Is the 13th month pay taxable? Up to ₱90,000 together with other benefits it is exempt; the excess is taxable ([RA 10963]()).
Does PhilForms file the DOLE report for me? No. PhilForms fills the form; you submit it on DOLE's system.
PhilForms is not affiliated with DOLE or BIR and does not give legal or tax advice; ask your regional DOLE office or a CPA.
Last checked 2026-10-16. Not affiliated with BIR, SSS, PhilHealth, Pag-IBIG or any government agency.