How Salary Deductions Work in the Philippines (2026 Guide) (2026)
Four lines on every Philippine payslip — SSS, PhilHealth, Pag-IBIG, withholding tax — and they interact in a specific order. Here’s the 2026 picture, with the rates that actually apply.
The order of deductions
SSS, PhilHealth and Pag-IBIG come off before income tax. Taxable income = gross − SSS − PhilHealth − Pag-IBIG (− de minimis within ceilings − 13th-month pay up to the ₱90,000 ceiling).
SSS — 5% on the ₱5,000–35,000 band
Employee share 5% of monthly salary credit (MSC), employer 10% (15% total since January 2025 — no 2026 step). That puts the employee contribution between ₱250 and ₹1,750/month. Amounts above ₱20,000 MSC flow to the individual MPF/WISP provident account at the same rate.
PhilHealth — 2.5% of basic
Total premium 5% of monthly basic salary, split evenly — so the employee pays 2.5%, on a ₱10,000 floor and ₱100,000 ceiling (₱250–2,500/month). The 5% rate was fully implemented in 2024 with no 2026 hike.
Pag-IBIG — 2% to ₱10,000
Employee 2% (employer 2%) on a maximum fund salary of ₱10,000 — at most ₹200/month each. (At ₹1,500 compensation or below, the employee rate is 1%.)
TRAIN brackets (2023+, unchanged 2026)
| Annual taxable income | Tax due |
|---|---|
| Not over ₱250,000 | 0% |
| ₱250,000 – 400,000 | 15% of excess over ₱250,000 |
| ₱400,000 – 800,000 | ₱22,500 + 20% of excess over ₱400,000 |
| ₱800,000 – 2,000,000 | ₱102,500 + 25% of excess over ₱800,000 |
| ₱2,000,000 – 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 |
13th-month pay and de minimis
The 13th-month pay (Presidential Decree 851: 1/12 of annual basic) is mandatory and tax-free up to a combined ₱90,000/year with bonuses and incentives. De minimis benefits were updated for 2026 (RR 29-2025, from 6 January 2026): rice ₱2,500/month, uniform ₱8,000/year, laundry ₱400/month, monetized leave 12 days/year, among others.
Worked examples
Example 1 — ₱50,000/month (basic ₹50,000): SSS ₹1,750 + PhilHealth ₹1,250 + Pag-IBIG ₹200 = ₹3,200 → taxable ₹561,600/year → tax ₹54,820/year → net ₱42,231.67/month.
Example 2 — ₱25,000/month: contributions ₹2,075 → taxable ₹275,100/year → tax ₹3,765/year → net ₱22,611.25/month.
Common mistakes
1. Old brackets on old calculators. If a calculator shows 20% starting at ₱400,000 with different base amounts, it’s running the obsolete 2018–2022 schedule.
2. PhilHealth on gross. The base is basic salary — using gross overstates the deduction on allowance-heavy pay.
3. Missing the ₱90k bonus ceiling. 13th-month pay plus bonuses above ₱90,000/year becomes taxable — plan December bonuses accordingly.
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Philippines — frequently asked questions
Philippines salary FAQs
What is deducted from a Philippine salary?
SSS (5%), PhilHealth (2.5% of basic), Pag-IBIG (2%) — then income-tax withholding on the remainder, using the TRAIN brackets.
How much is SSS in 2026?
Employee share 5% of the ₱5,000–35,000 monthly salary credit — ₱250 to ₹1,750/month. No rate change in 2026.
Is overtime taxed?
Overtime pay is taxable compensation, but the ₱90,000/year ceiling shelters 13th-month pay and bonuses up to that combined amount.
Are foreigners deducted the same?
Yes — SSS, PhilHealth and Pag-IBIG apply to all covered employees regardless of nationality.