Your job offer says one number, but your payslip shows another. The difference comes from mandatory deductions required by law. This guide shows the exact order of computation used by Philippine payroll so you can check your own payslip.
Step 1: Determine gross pay
Gross pay is your basic salary for the period plus overtime, holiday premiums, night differential, commissions and taxable allowances, minus deductions for unpaid absences and tardiness.
Step 2: Subtract mandatory contributions
- SSS: 5% of your monthly salary credit, up to ₱1,750. See the SSS contribution table.
- PhilHealth: 5% premium on basic monthly salary (floor ₱10,000, ceiling ₱100,000), shared equally — so the employee pays 2.5%, between ₱250 and ₱2,500.
- Pag-IBIG: 2% of monthly compensation up to a ₱10,000 cap, so a maximum of ₱200 (1% for those earning ₱1,500 or less).
Step 3: Compute withholding tax
Taxable income = gross taxable pay − mandatory contributions − non-taxable benefits. Apply the BIR monthly withholding table: nothing on the first ₱20,833, then 15% of the excess up to ₱33,332, and so on. Full details are in the BIR TRAIN tax table guide.
Step 4: Subtract other deductions
SSS and Pag-IBIG salary loans, company loans, HMO dependents and cooperative contributions are deducted last. They do not reduce your tax.
Worked example: ₱30,000 monthly salary
| Gross monthly salary | ₱30,000.00 |
| SSS (5% × ₱30,000 MSC) | − ₱1,500.00 |
| PhilHealth (2.5%) | − ₱750.00 |
| Pag-IBIG | − ₱200.00 |
| Taxable income | ₱27,550.00 |
| Withholding tax: 15% × (₱27,550 − ₱20,833) | − ₱1,007.55 |
| Net pay | ₱26,542.45 |
|---|
That is about 88.5% of gross. Paid semi-monthly, each payout would be about ₱13,271, depending on how your employer splits deductions.
What about the 13th month pay?
The 13th month pay is not subject to contributions and is tax-free up to ₱90,000, so it is usually received almost in full. Compute it with the 13th month pay calculator.
Check your own numbers
Enter your salary in the net pay calculator to see each deduction. If your payslip differs by more than a few pesos, ask HR which salary base and rounding they use, and confirm that your contributions are actually posted in your SSS, PhilHealth and Pag-IBIG online accounts.