Salary Calculator
Philippines

The salary calculator for the Philippines works by taking the gross salary, which is the total agreed-upon salary before deductions, and applying all mandatory contributions and tax deductions to determine the net salary or actual take-home pay. The key deductions include income tax, which follows a progressive tax system, meaning higher salaries are taxed at higher rates. Employees also contribute to the Social Security System (SSS), which provides social security benefits such as pensions and disability support, while PhilHealth ensures access to affordable healthcare, and Pag-IBIG contributions support housing and loan benefits.

For employers, the salary calculator provides an overview of the total employment cost, which includes not only the gross salary but also the employer’s share of SSS, PhilHealth, and Pag-IBIG contributions, as well as other potential payroll expenses. By entering a gross salary amount, users can see how much will be deducted and what the final take-home pay will be after all necessary contributions.

The cost of salary in the Philippines consists of various components, including gross salary, mandatory contributions, and other statutory expenses. Employers must consider not only the agreed salary but also additional payments required by law, such as employer contributions to SSS, PhilHealth, and Pag-IBIG. Employees earning more than PHP 250,000 annually are subject to personal income tax, which is levied at progressive rates ranging from 0% to 35%. Employers may also offer additional benefits such as bonuses, allowances, and private health insurance, which further impact the overall cost of employment.

The personal income tax system in the Philippines follows a progressive tax structure, meaning the higher the salary, the higher the tax rate applied. Employees earning PHP 250,000 or less per year are exempt from income tax, while those earning above this threshold are taxed at increasing rates based on income brackets. The tax rates range from 15% for earnings exceeding PHP 250,000 to 35% for those earning above PHP 8,000,000 annually. Taxes are automatically withheld from an employee’s salary by the employer and remitted to the Bureau of Internal Revenue (BIR). Employees may also qualify for tax exemptions and deductions depending on their dependents and benefits.

Mandatory employee benefits in the Philippines include contributions to the Social Security System (SSS), which provides retirement, maternity, disability, and death benefits. PhilHealth ensures that employees have access to government-subsidized healthcare, reducing the cost of medical expenses. The Pag-IBIG Fund allows employees to access housing loans and savings programs that support home ownership. In addition to these mandatory benefits, many companies offer additional perks such as private health insurance, performance-based bonuses, and transportation or meal allowances to attract and retain employees.

Employers in the Philippines must also account for additional expenses, including the legally required 13th-month pay, which is equivalent to one month’s salary and must be provided to employees each year. Overtime and holiday pay must be paid to employees working beyond standard hours or on official public holidays. Some companies also provide separation pay in cases of termination, as required by law. Government-mandated leave benefits, including sick leave, maternity leave, and paternity leave, must also be factored into overall employment costs. These additional costs contribute to the total salary expense and must be managed in compliance with Philippine labour laws.

Understanding the difference between gross salary and net salary is crucial when evaluating salary packages in the Philippines. Gross salary refers to the total agreed salary before any deductions, including taxes and mandatory contributions. This is the amount stated in employment contracts and used in salary negotiations. Net salary, also known as take-home pay, is the amount an employee receives after deductions such as income tax, SSS, PhilHealth, and Pag-IBIG contributions have been applied.

For example, an employee with a gross salary of PHP 40,000 will receive a lower net salary after deductions for taxes and social contributions. The difference between gross and net salary can be significant depending on the applicable tax rates and contribution percentages. Our Philippines Salary Calculator provides a transparent breakdown of these deductions, helping employees understand their take-home pay and allowing employers to plan payroll expenses accurately.