How Philippine Payroll Deductions Work
What SSS, PhilHealth, Pag-IBIG and withholding tax take from your salary, how each is computed, and why your payslip may look different.
Updated
Every payday, four deductions come out of a typical private-sector employee’s pay: SSS, PhilHealth, Pag-IBIG, and withholding tax. Three are contributions you get benefits back from. One is income tax. Here’s how each one is computed.
SSS
The Social Security System covers sickness, maternity, disability, retirement, and death benefits, and runs salary and calamity loans.
Since January 2025, the total contribution is 15% of your Monthly Salary Credit (MSC): 5% from you, 10% from your employer. Your MSC is your monthly compensation rounded to a ₱500 bracket, with a minimum of ₱5,000 and a maximum of ₱35,000. So:
- Earning ₱18,200? Your MSC is ₱18,000 and you pay ₱900.
- Earning ₱50,000? Your MSC is capped at ₱35,000 and you pay ₱1,750.
The part of the MSC above ₱20,000 goes to the Mandatory Provident Fund (WISP), a separate savings account you get back on retirement. Your employer also pays a small Employees’ Compensation premium (₱10 or ₱30).
PhilHealth
PhilHealth’s premium is 5% of your monthly basic salary, split equally: 2.5% from you, 2.5% from your employer. Salaries below ₱10,000 are computed as ₱10,000, and anything above ₱100,000 as ₱100,000. Your share ranges from ₱250 to ₱2,500 a month.
Pag-IBIG
The Home Development Mutual Fund takes 2% of your monthly compensation up to ₱10,000, matched by your employer. In practice, almost every employee pays ₱200 a month. If you earn ₱1,500 or less, your rate is 1%. You can choose to contribute more; it earns dividends and counts toward Pag-IBIG housing loan eligibility.
Withholding tax
Income tax is computed on taxable income: your gross compensation minus your SSS, PhilHealth, and Pag-IBIG shares and other non-taxable items. Under the TRAIN law rates in effect since 2023:
| Annual taxable income | Tax |
|---|---|
| ₱250,000 and below | 0% |
| Over ₱250,000 to ₱400,000 | 15% of the excess over ₱250,000 |
| Over ₱400,000 to ₱800,000 | ₱22,500 + 20% of the excess over ₱400,000 |
| Over ₱800,000 to ₱2,000,000 | ₱102,500 + 25% of the excess over ₱800,000 |
| Over ₱2,000,000 to ₱8,000,000 | ₱402,500 + 30% of the excess over ₱2,000,000 |
| Over ₱8,000,000 | ₱2,202,500 + 35% of the excess over ₱8,000,000 |
Your employer estimates your yearly tax and withholds a portion every payday. In December it compares what was withheld against your actual tax for the year and adjusts, which is why your last payslip of the year can be bigger or smaller than usual.
Minimum wage earners pay no income tax on their minimum wage, holiday pay, overtime, night differential, or hazard pay.
Why your payslip may differ
- Uneven cutoffs. Many employers deduct all contributions from one kinsenas instead of splitting them.
- What counts as compensation. Some employers include regular allowances when computing SSS.
- Other deductions. SSS and Pag-IBIG loan amortizations, HMO for dependents, and company cooperative shares.
- Taxable allowances and bonuses. These raise taxable income, and bonuses above the ₱90,000 tax-free limit are taxed.
Want your own numbers? The Salary Calculator shows the full breakdown, and the Take-Home Pay Calculator adds allowances and loans.