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Income Taxation
Approved 2015-02-12

Republic Act No. 10653

An act adjusting the 13th month pay and other benefits ceiling excluded from the computation of gross income for purposes of income taxation, amending for the purpose section 32(b), chapter vi of the national internal revenue code of 1997, as amended

AN ACT ADJUSTING THE 13th MONTH PAY AND OTHER BENEFITS CEILING EXCLUDED FROM THE COMPUTATION OF GROSS INCOME FOR PURPOSES OF INCOME TAXATION, AMENDING FOR THE PURPOSE SECTION 32(B), CHAPTER VI OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED

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In plain language

The Act amends Section 32(b) of the National Internal Revenue Code to exclude 13th month pay and other benefits up to a ceiling of ₱82,000 from gross income for income tax purposes, provides for a periodic CPI adjustment every three years, and mandates implementation rules by the Secretary of Finance.

  • Exclusion of 13th month pay and other benefits up to ₱82,000 from gross income
  • CPI adjustment of the exclusion amount every three years
  • Implementation rules by the Secretary of Finance are not mandatory for effectivity
  • Repeal of inconsistent laws, orders, issuances, circulars, rules or regulations
Income Taxation
13th Month Pay
Revenue Code
Fiscal Policy

Sixteenth Congress Second Regular Session

Begun and held in Metro Manila, on Monday, the twenty-eighth day of July, two thousand fourteen.

REPUBLIC ACT No. 10653

AN ACT ADJUSTING THE 13th MONTH PAY AND OTHER BENEFITS CEILING EXCLUDED FROM THE COMPUTATION OF GROSS INCOME FOR PURPOSES OF INCOME TAXATION, AMENDING FOR THE PURPOSE SECTION 32(B), CHAPTER VI OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1

Section 32(B), Chapter VI of the National Internal Revenue Code of the Philippines (Republic Act No. 8424) is hereby amended as follows:

"SEC. 32. Gross Income.

"x x x

"(B) Exclusions from Gross Income. The following items shall not be included in gross income and shall be exempt from taxation under this Title:

"xxx

"(7) Miscellaneous Items. "xxx

"(e) 13th Month Pay and Other Benefits. Gross benefits received by officials and employees of public and private entities: Provided, however, That the total exclusion under this subparagraph shall not exceed eighty-two thousand pesos (P82,000) which shall cover:

"xxx

"(iv) Other benefits such as productivity incentives and Christmas bonus: Provided, That every three (3) years after the effectivity of this Act, the President of the Philippines shall adjust the amount herein stated to its present value using the Consumer Price Index (CPI), as published by the National Statistics Office (NSO).

Section 2. Implementing Rules and Regulations

The Secretary of Finance shall promulgate the necessary rules and regulations for the faithful and effective implementation of the provisions of this Act: Provided, That, the failure of the Secretary of Finance to promulgate the said rules and regulations shall not prevent the implementation of this Act upon its effectivity.

Section 3. Repealing Clause

All laws, orders, issuances, circulars, rules and regulations or parts thereof which are inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

Section 4. Separability Clause

If any provision of this Act is declared unconstitutional or invalid, other parts or provisions hereof not affected thereby shall continue to be in full force and effect.

Section 5. Effectivity

This Act shall take effect fifteen (15) days following its publication in at least two (2) newspapers of general circulation.

Approved,

| (Sgd.) FRANKLIN M. DRILON President of the Senate | (Sgd.) FELICIANO BELMONTE JR. |

This Act which is a consolidation of House Bill No. 4970 and Senate Bill No. 2437 was finally passed by the House of Representatives and the Senate on December 1, 2014 and November 26, 2014, respectively.

OSCAR G. YABES

Secretary of Senate

MARILYN B. BARUA-YAP

Secretary General House of Representatives

Approved: FEB 12 2015

BENIGNO S. AQUINO III

President of the Philippines

For information and research only, and not legal advice. This text may not reflect later amendments. For certified copies, refer to the Official Gazette or the issuing agency.