12 NON-TAXABLE COMPENSATION INCOME OF GOVERNMENT EMPLOYEES THAT EVERY ACCOUNTANT SHOULD KNOW TO AVOID COMMITTING ERRORS IN THE COMPUTATION OF THEIR INCOME TAX

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1. Thirteenth (13th) Month Pay (Year-End Bonus) and Other Benefits not exceeding Ninety Thousand Pesos (P90,000.00) paid or accrued during the year. Any amount exceeding Ninety Thousand Pesos (P90,000.00) are taxable compensation.

2. Facilities and privileges of relatively small value or “De Minimis Benefits” as defined in existing issuances and conforming to the ceilings prescribed therein;

3. Fringe benefits which are subject to the fringe benefits tax under Section 33 of
the NIRC, as amended;

4. Representation and Transportation Allowance (RATA) granted to public officers and employees under the General Appropriations Act;

5. Personnel Economic Relief Allowance (PERA) granted to government personnel;

6. The monetized value of leave credits paid to government officials and employees;

7. Mandatory/compulsory GSIS, Medicare and Pag-Ibig Contributions, provided that, voluntary contributions to these institutions in excess of the amount considered mandatory/compulsory are not excludible from the gross income of the taxpayer and hence, not exempt from Income Tax and Withholding Tax;

8. Union dues of individual employees;

9. Compensation income of employees in the public sector with compensation income of not more than the Statutory Minimum Wage (SMW) in the non- agricultural sector applicable to the place where he/she is assigned;

10. Holiday pay, overtime pay, night shift differential pay, and hazard pay received by Minimum Wage Earners (MWEs);

11. Benefits received from the GSIS Act of 1937, as amended, and the retirement gratuity/benefits received by government officials and employees under pertinent retirement laws;

12. All other benefits given which are not included in the above enumeration but are exempted from income tax as well as withholding tax on compensation under existing laws, as confirmed by BIR.

Legal Basis: https://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202014/RMO%2023%20Full%20text.pdf
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