What are De Minimis benefits?
De Minimis benefits are facilities or privileges, of relatively small value, offered or furnished by the employer to it’s employees as a means of promoting their health, goodwill, contentment, or efficiency. These benefits are not subject to income tax as well as withholding tax on compensation income for both managerial and rank and file employees.
Whats new?
On January 30, 2025, the Bureau of Internal Revenue released Revenue Regulation 004-2025 which amends Revenue Regulation 2-98 with respect to De Minimis benefits, specifically, uniform allowance and employee achievement awards. It adjusts the uniform allowance benefit limit from Php6,000.00 to Php7,000.00 and the employee achievement awards benefit to now include cash and gift certificate from previously only being in the form of tangible personal property. The limit of the employee achievement awards benefit still remains at Php10,000.00.
Source: https://bir-cdn.bir.gov.ph/BIR/pdf/RR%20No.%204-2025.pdf
What are the De Minimis benefits?
The following shall be considered as De Minimis benefits not subject to income tax as well as withholding tax on compensation income of both managerial and rank and file employees:
- Monetized unused vacation leave credits of private employees not exceeding ten (10) days during the year;
- Monetized value of vacation and sick leave credits paid to government officials and employees;
- Medical cash allowance to dependents of employees, not exceeding Php1,500.00 per employee per semester or Php250.00 per month;
- Rice subsidy of Php2,000.00 or one (1) sack of 50 kg. rice per month amounting to not more than Php2,000.00;
- Uniform and Clothing allowance not exceeding Php7,000.00 per annum;
- Actual medical assistance, e.g., medical allowance to cover medical and healthcare needs, annual medical/executive check-up, maternity assistance, and routine consultations, not exceeding Php10,000.00 per annum;
- Laundry allowance not exceeding Php300.00 per month;
- Employees achievement awards, e.g., for length of service or safety achievement, in any form, whether in cash, gift certificate or any tangible personal property, with an annual monetary value not exceeding Php10,000.00 received by the employee under an established written plan which does not discriminate in favor of highly paid employees;
- Gifts given during Christmas and major anniversary celebrations not exceeding Php5,000.00 per employee per annum;
- Daily meal allowance for overtime work and night/graveyard shift not exceeding twenty-five percent (25%) of the basic minimum wage on a per region basis;
- Benefits received by an employee by virtue of a collective bargaining agreement (CBA) and productivity incentive schemes provided that the total annual monetary value received from both CBA and productivity incentive schemes combined do not exceed Php10,000.00 per employee per taxable year;
What if employees receive more than the limit for De Minimis benefit?
If an employee receives more than the limit for each De Minimis benefit, the excess of each limit is added to the employee’s other benefits which, when added with the 13th month pay, has a limit of Php90,000.00 before the excess becomes subject to income tax and withholding tax.
Here is an example of how to apply the excess of De Minimis benefits:
Scenario 1
- Uniform allowance (De Minimis benefit): Php10,000.00
- Load allowance (Other benefit): Php20,000.00
- 13th month pay: Php50,000.00
- Total other benefits: Php23,000.00 (20,000.00 + 3,000.00 excess of the 7,000.00 uniform allowance limit)
- Total other benefits and 13th month pay: Php73,000.00 (50,000.00 + 23,000.00)
- Amount subject to income tax and withholding tax: Php0.00 excess of the 90,000.00 limit
Scenario 2
- Uniform allowance (De Minimis benefit): Php10,000.00
- Load allowance (Other benefit): Php20,000.00
- Transportation allowance (Other Benefit): Php50,000.00
- 13th month pay: Php50,000.00
- Total other benefits: Php73,000.00 (50,000.00 + 20,000.00 + 3,000.00 excess of the 7,000.00 uniform allowance limit)
- Total other benefits and 13th month pay: Php123,000.00 (50,000.00 + 73,000.00)
- Amount subject to income tax and withholding tax: Php33,000.00 excess of the 90,000.00 limit
The Synergy Human Resource Information System (Synergy HRIS) allows your organization to easily track De Minimis and other benefits as well as compute withholding tax for your employees.