Philippines Payroll Guide: SSS, PhilHealth, Pag-IBIG, and Tax Withholding (2026)

Philippines payroll involves four mandatory contributions. SSS (Social Security System) covers retirement, disability, and death benefits at approximately 14% combined rate. PhilHealth provides national health insurance at 5% combined. Pag-IBIG (HDMF) funds housing loans at 4% combined. Employers must also withhold income tax using the graduated tax table under TRAIN Law.

What Is the SSS Contribution Schedule in the Philippines?

SSS uses a salary bracket system for contributions. As of 2024, the total contribution rate is 14% of monthly salary credit: employer pays approximately 9.5% and employee pays 4.5%. The minimum monthly salary credit (MSC) is PHP 4,000. The maximum MSC is PHP 30,000. Contributions are remitted monthly by the 10th of the following month.

The Employees' Compensation (EC) program adds PHP 10-30/month (employer-paid) depending on the MSC bracket. EC covers work-related injury, sickness, and death. Total employer SSS + EC cost ranges from PHP 390 to PHP 2,880/month per employee.

What Are the PhilHealth Contribution Rates?

PhilHealth premium rate is 5% of monthly basic salary, shared equally between employer (2.5%) and employee (2.5%). The monthly salary floor is PHP 10,000. The monthly salary ceiling is PHP 100,000. Minimum monthly premium: PHP 500 (PHP 250 each). Maximum monthly premium: PHP 5,000 (PHP 2,500 each). Contributions are remitted by the 10th of the following month.

What Are the Pag-IBIG Contribution Rates?

Pag-IBIG (HDMF) contributions are based on monthly compensation. For employees earning over PHP 1,500/month: employee contributes 2% and employer contributes 2% of monthly compensation. The maximum monthly compensation for contribution purposes is PHP 5,000. Maximum monthly contribution: PHP 200 (PHP 100 each). Contributions are remitted by the 10th of the following month.

Pag-IBIG membership entitles employees to housing loans at below-market interest rates (3-6% per annum). Employees with 24 months of contributions can apply for multi-purpose loans. The employer's contribution is a mandatory cost regardless of employee utilization of Pag-IBIG benefits.

How Does Withholding Tax Work in the Philippines?

The TRAIN Law (Republic Act No. 10963) sets the individual income tax rates effective from 2023 onwards. Annual taxable income of PHP 250,000 and below is exempt from income tax. The graduated rates apply above this threshold. The employer withholds tax from each payroll period based on annualized taxable income.

The employer files BIR Form 1601-C (Monthly Remittance Return) by the 10th of the following month. Annual reconciliation uses BIR Form 1604-C (Annual Information Return). Each employee receives BIR Form 2316 (Certificate of Compensation) by January 31. Aniday's outsourced payroll Philippines (Aniday Outsourced Payroll Philippines) handles all BIR filings.

What Are the Payroll Filing Deadlines in the Philippines?

Are overtime payments subject to SSS and PhilHealth?

SSS contributions are based on the monthly salary credit, which includes basic salary only. Overtime pay, holiday pay, and night shift differentials are generally not included in the SSS contribution base. PhilHealth is based on basic monthly salary. Pag-IBIG is based on monthly compensation including overtime. Withholding tax applies to all compensation including overtime.

How is the payroll cycle structured in the Philippines?

The Labor Code requires payment at intervals not exceeding 16 days. Standard practice is semi-monthly payment on the 15th and last day of each month. Some companies pay bi-weekly (every 2 weeks). Weekly payroll is common in manufacturing and retail. The employer must issue pay slips showing all earnings and deductions.

What is the minimum wage in the Philippines?

Minimum wages vary by region. NCR (Metro Manila) minimum wage: PHP 610-645/day for non-agriculture workers (as of 2024 wage order). CALABARZON: PHP 480-533/day. Other regions range from PHP 341-520/day. The Regional Tripartite Wages and Productivity Board sets minimum wages by region. Cost-of-living allowances (COLA) may apply in some regions.

Are de minimis benefits taxable?

De minimis benefits within BIR-prescribed limits are tax-exempt. Key limits: rice subsidy (PHP 2,000/month or 50kg rice), uniform/clothing allowance (PHP 6,000/year), medical cash allowance (PHP 10,000/year), laundry allowance (PHP 300/month), meal allowance for overtime (25% of minimum wage per overtime meal). Amounts exceeding limits are taxable but the first PHP 90,000 of excess falls under the 13th month/bonus tax exemption.

How does the employer handle year-end tax adjustment?

The employer performs year-end tax adjustment (annualization) in December. The employer computes the annual taxable income, applies the annual tax table, compares the total tax due against total tax withheld during the year, and either refunds the over-withholding or collects the under-withholding from the employee's December pay. BIR Form 2316 documents the final computation.

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