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How does payroll software calculate withholding tax on a 13th month pay or bonus that exceeds the tax-exempt threshold in the Philippines?
Question

How does payroll software calculate withholding tax on a 13th month pay or bonus that exceeds the tax-exempt threshold in the Philippines?

Answer
Omni HR calculates 13th month pay and bonuses, then applies BIR withholding tax only to the portion above the tax-exempt threshold. HR doesn't need to track that threshold separately, and the figures feed into the BIR 2316 generated at year-end.
Updated
Aug
2026