Bicameral Panel Increases Tax-free 13th Month Pay and other Bonuses to P90K

Starting 2018, tax-free ceiling for 13th month pay and other bonuses is will increase to P90,000.00 after the members of the bicameral conference committee mutually agreed on the Tax Reform for Acceleration and Inclusion (TRAIN) bill.

Under the existing Republic Act 10653, employees’ 13th month pay and other benefits, which includes productivity or performance incentives and Christmas bonuses are exempted from tax only if they do not exceed the tax ceiling of P82,000.00.

In light of the yuletide season, the bicameral panel agreed to increase the tax cap of 13th month pay and other bonuses according to the chairman of the Senate ways and means committee, Senator Sonny Angara.

In the retained senate version of the TRAIN, the tax-free cap is P82,000.00, while the approved version of the House of Representatives increased it to P100,000.00.

As compromise, bicameral members, who are tasked to reconcile the differences of the two versions of the bill, have agreed to increase the tax-exempt ceiling to P90,000.00 by January, 2018.

The good news is an early gift to all ordinary employees according to Senator Angara.

Meanwhile, in a separate briefing, Senator Angara was asked if the move would result to a revenue loss on the side of the government, he admitted that it will have an effect, but just a very little.

Earlier, bicameral panel have likewise agreed to exempt the P250,000.00 annual taxable income of all individual income tax payers.

Under the previous proposal from the Department of Finance, it was sought to scrap the 13th month bonus tax exemption and make it part of the all-inclusive P250,000.00 tax exemption.

Quoting the law, Angara claimed that the 13th month pay should be given to employees in the private sector not later than December 24, and the same must be equivalent to one-twelfth (1/12) of an employee’s basic salary within a calendar year.

He also reminded employers to pay their rank-and-file employees a 13th month pay regardless of the nature of their employment and how their monthly wages are being paid, as long as they worked for at least a month during a calendar year.

Senator Minority Leader, Franklin Drilon, is also confident that they could accomplish the proposed tax reform measure early this week.

He noted that almost 85 to 90 percent of the TRAIN has been settled following their third bicameral meeting.

Sen. Sonny Angara, Sen. Ralph Recto, Sen. Loren Legarda and Migz Zubiri were among the lawmakers who attended the recent bicameral meeting.

Aizelle Joe