12 Non-taxable Compensation Income of Government Employees Every Accountant Should Know, In Order To Avoid Committing Mistakes in Computing Their Income Tax

  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.

Source: Bureau of Internal Revenue

Related: WHAT ARE THE AUTHORIZED ‘DE MINIMIS BENEFITS’ UNDER THE TRAIN LAW

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14 Comments on “12 Non-taxable Compensation Income of Government Employees Every Accountant Should Know, In Order To Avoid Committing Mistakes in Computing Their Income Tax”

  1. How about monthly fixed representation allowance given to board of directors, (director not employee of the company or coop.)is it subject to withholding tax expanded?

  2. Paano po kung ung monetization ng leave credits ay ginawang subject to in the excess of 90k as stated in #1. Ano po ang pwedeng gawin ng empleyado? Kasi un po ang sabi ng accountant ng aming agency….

  4. For inquiries po sa tax exemption, as church members, we are giving our Tithes & Offerings. Can we consider this as exemption?

    • No. Tithes and offerings are not among the authorized items which can be claimed as tax exempt. Nonth

    • No. Tithes and offerings are not among the items which we can claim as tax exempt.

  5. Hi, just for clarification. In the new law particulary RR11-2018, RATA is no longer included in the exemptions… How do we reconcile it? Thanks

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

    Good day! Ask lng; is hazard pay taxable if hndi minimum wage earner??

    • Yes. As a general rule, all income received are taxable unless expressly exempted by law.

  9. Mam Girley, as a general rule, all income received by an individual, unless expressly exempted by a law, are taxable.

  10. Thanks you very much! What about incentives such as publication or scientific paper publication?