13th Month Pay 2026: Computation, the December 24 Deadline, and the DOLE Report
By Tamoogi Team
Who is entitled to 13th month pay, how to compute it from basic salary, when it must be paid, how much is tax-free, and how to file the DOLE compliance report by January 15.
Every employer with rank-and-file employees pays 13th month pay on or before December 24. For 2026 that is a Thursday. The amount is at least one-twelfth of the basic salary the employee earned during the year, and the employer reports the payout to DOLE by January 15, 2027.
The rule comes from Presidential Decree No. 851, issued in 1975, and the Department of Labor and Employment restates it in a labor advisory each November. The advisory does not change the amount or the date; it reminds employers that neither can be deferred.
Who is entitled
| Worker | Entitled? |
|---|---|
| Rank-and-file employee, regardless of position title or pay method | Yes, after at least one month of service in the year |
| Probationary, contractual, or project-based employee | Yes, proportionate to months worked |
| Employee who resigned or was separated during the year | Yes, proportionate, paid with the final pay |
| Managerial employee | Not under PD 851, unless company policy or contract grants it |
| Kasambahay (household worker) | Yes, under the Domestic Workers Act (RA 10361) |
| Worker paid purely by commission, boundary, or task, with no fixed wage | No |
| Worker with a fixed wage plus commission | Yes, computed on the fixed wage |
| Government employee | Not under PD 851; covered by separate rules |
“Rank-and-file” means anyone who is not managerial, so supervisors and team leads are usually covered.
How to compute it
The minimum is simple:
13th month pay = total basic salary earned in the calendar year ÷ 12
Basic salary is the pay for work done, before deductions. It leaves out overtime pay, premium pay for holidays and rest days, night shift differential, cost-of-living allowance, and cash benefits such as meal or transport allowances, unless your contract, CBA, or long-standing company practice treats them as part of basic pay.
Three worked examples:
| Case | Basic salary earned in 2026 | 13th month pay |
|---|---|---|
| Full year at ₱18,000 a month | ₱216,000 | ₱18,000 |
| Hired on June 1 at ₱18,000 a month | ₱126,000 (7 months) | ₱10,500 |
| Resigned on September 30 at ₱20,000 a month | ₱180,000 (9 months) | ₱15,000, paid with the final pay |
Unpaid leave reduces basic salary earned, so it reduces the 13th month pay. Paid leave counts as salary earned. Maternity leave benefits paid by SSS are not basic salary and are excluded.
Employers can pay more than the minimum, and many pay half in May or June and the rest in December. The split is a company choice; the law only fixes the December 24 deadline for the full amount.
Tax treatment
The 13th month pay is tax-exempt together with other benefits (Christmas bonus, productivity incentives, and similar) up to ₱90,000 a year under Section 32(B)(7)(e) of the Tax Code, as amended by the TRAIN Law. Only the excess over ₱90,000 is added to the employee’s taxable compensation and withheld through Form 1601-C. For most small-business payrolls, the whole 13th month pay falls under the ceiling.
Record the amount on each employee’s Form 2316 for the year so the annualization in December comes out right.
The DOLE compliance report
Paying is half the obligation. The other half is the report:
- Go to the DOLE Online Compliance Portal at reports.dole.gov.ph. Earlier advisories called it the Establishment Report System; the address is the same.
- Fill in the establishment details: name, address, main product or line of business, and total employment.
- Enter the 13th month pay figures: the number of workers who received it, the amount per employee or per group, and the total paid.
- Name a contact person with position and phone number.
- Submit by January 15 of the following year. For the 2026 payout, that is Friday, January 15, 2027.
Keep a copy of the submission. DOLE labor inspectors ask for it alongside your payroll records.
Penalties and complaints
PD 851 has no fixed fine, but non-payment is a labor standards violation. An employee can file a complaint with the DOLE regional office or through the Single Entry Approach, and the usual outcome is an order to pay the amount due, sometimes with other unpaid benefits found during the inspection. DOLE has said publicly that financial difficulty is not a ground for exemption or delay.
A year-end payroll checklist
- November: compute the amount for every employee, including those who left during the year, and confirm the cash is available.
- On or before December 24: release the pay and record it on the payslip as “13th month pay.”
- December: run the year-end annualization and prepare each employee’s Form 2316.
- By January 15: submit the compliance report on the DOLE portal and keep the confirmation.
- By January 31: file Form 1604-C and give employees their 2316.
If you registered as an employer this year, our guide to SSS, PhilHealth, and Pag-IBIG employer registration covers the contributions that run alongside payroll, and the business permit renewal guide covers the other January deadline.
Questions and answers
Common questions
- When is 13th month pay due?
- On or before December 24 each year, under Presidential Decree No. 851 and its implementing rules. DOLE's yearly labor advisory repeats the date and reminds employers that it cannot be deferred. For 2026, December 24 is a Thursday.
- How is 13th month pay computed?
- Total basic salary earned during the calendar year divided by 12. Basic salary excludes overtime, holiday and night differential premiums, allowances, and other cash benefits unless your company policy or contract treats them as part of basic pay. An employee who worked part of the year gets a proportionate amount.
- Is 13th month pay taxable?
- 13th month pay and other benefits are tax-exempt up to ₱90,000 a year under the Tax Code as amended by the TRAIN Law. Only the amount above ₱90,000, combined with other bonuses, is added to taxable compensation.
- Do I have to report 13th month pay to DOLE?
- Yes. Employers submit a compliance report through the DOLE Online Compliance Portal at reports.dole.gov.ph not later than January 15 of the following year. The report lists the establishment, its total employment, the number of workers paid, and the amounts granted.
- Can a small or struggling business be exempted?
- No. DOLE has stated that there is no exemption or deferment for distressed employers. The only employers outside PD 851 are the government and its agencies, employers already paying an equivalent benefit, and those with purely commission-based or task-based workers. Household workers are entitled under the Domestic Workers Act.
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