An employer’s guide to what you withhold, what you match, and when you remit.
In 2026, Philippine payroll taxes for employers cover four main items: SSS at 15% of the monthly salary credit, PhilHealth at 5% of basic salary, Pag-IBIG at up to 4% of capped fund salary, and graduated withholding tax on compensation under the TRAIN Law.
Employers withhold the employee shares, add the employer shares, and remit everything to the agencies each month.
Hiring in the Philippines is straightforward until the first payslip. That is when foreign employers meet four separate deductions, three government agencies, and a tax bracket that has nothing to do with gross pay. Miss one remittance and the penalties start the next month.
This guide breaks down every payroll tax you will touch in 2026. You will see the current rates, the salary caps, real peso examples, and the exact deadlines. We also flag the mistakes that quietly cost employers money, because those are the ones that rarely show up in a vendor pitch deck.
A quick framing note. Peorient is an independent EOR and PEO advisory platform, so the numbers below are not tied to any provider’s product. If you want the wider context on what an employer of record actually does, our full guide to employers of record covers the model end to end.
People use “payroll taxes” loosely, so it helps to be precise. In the Philippines the term covers two different things that land on the same payslip.
The first group is statutory contributions. These fund social insurance: retirement and sickness benefits through the Social Security System, health coverage through PhilHealth, and housing savings through the Pag-IBIG Fund. Both the worker and the employer pay into each one.
The second is withholding tax on compensation. This is income tax, collected by the Bureau of Internal Revenue. The employee owes it, but the employer is legally required to deduct it from each paycheck and hand it to the BIR. The company acts as the collection agent.
So an employer’s monthly job is simple to state. Withhold the employee’s share of all four items, add the employer’s own share of the three contributions, and remit each amount to the right agency on time. The hard part is the arithmetic and the calendar, which is where the rest of this guide goes.
SSS is the largest single deduction on most Filipino payslips. It funds retirement pensions, plus sickness, maternity, disability, unemployment, and death benefits. Coverage is mandatory for private sector employees from day one of employment.
The legal basis is the Social Security Act of 2018, also known as Republic Act 11199. That law set a schedule of rate increases that ended in 2025, so the rate you use in 2026 is the final, fully phased-in figure.
The total SSS contribution in 2026 is 15 percent of the employee's monthly salary credit. The employer pays 10 percent and the employee pays 5 percent.
Two terms matter here. The first is the monthly salary credit, or MSC. SSS does not apply the rate to actual salary. It maps the salary to a bracket, and the bracket value becomes the MSC. The MSC floor is 5,000 pesos and the ceiling is 35,000 pesos. Anyone earning above 35,000 still contributes as if they earned exactly 35,000.
The second is the EC, or Employees’ Compensation contribution. This is a small, employer-only charge that funds work-injury benefits. It is 10 pesos when the MSC is below 15,000, and 30 pesos at 15,000 and above. It sits on top of the 10 percent employer share.
One more piece affects higher earners. For an MSC above 20,000, the portion above that line is routed into a mandatory provident fund (the WISP, sometimes shown as MPF on the table). The headline 5 and 10 percent split does not change. The split only governs where the money is saved inside SSS.
| Monthly Salary Credit | Employee (5%) | Employer (10%) | EC | Total |
|---|---|---|---|---|
| 5,000 (minimum) | 250 | 500 | 10 | 760 |
| 15,000 | 750 | 1,500 | 30 | 2,280 |
| 20,000 | 1,000 | 2,000 | 30 | 3,030 |
| 25,000 | 1,250 | 2,500 | 30 | 3,780 |
| 30,000 | 1,500 | 3,000 | 30 | 4,530 |
| 35,000 (maximum) | 1,750 | 3,500 | 30 | 5,280 |
Salary: 30,000 pesos per month.
The MSC is 30,000. Total SSS is 15 percent, so 4,500 pesos.
The employee pays 5 percent, which is 1,500 pesos. This is deducted from the paycheck.
The employer pays 10 percent, which is 3,000 pesos, plus the 30-peso EC. So 3,030 pesos out of company funds.
Combined remittance to SSS for this one employee: 4,530 pesos a month.
Using last year's table. The rate climbed from 14 percent in 2024 to 15 percent in 2025 and holds at 15 percent in 2026. Payroll software that was not updated will under-deduct, and the shortfall plus a 2 percent monthly penalty lands on the employer, not the worker.
PhilHealth is the national health insurance program. It covers inpatient care, selected outpatient procedures, and the primary-care Konsulta package. Like SSS, it is compulsory for employees, and the cost is shared.
The governing law is the Universal Health Care Act, Republic Act 11223. That law scheduled annual premium increases that topped out at 5 percent, which is the rate that applies in 2026.
PhilHealth in 2026 is 5 percent of monthly basic salary, split evenly. The employer pays 2.5 percent and the employee pays 2.5 percent.
The premium runs between a floor and a ceiling. The salary floor is 10,000 pesos, so the minimum monthly premium is 500 pesos. The salary ceiling is 100,000 pesos, so the maximum premium is 5,000 pesos. A worker earning 100,000 or more pays a fixed 2,500-peso employee share, no matter how high the salary climbs.
Watch the word basic. PhilHealth uses basic salary only. Overtime pay, allowances, bonuses, and commissions are excluded from the computation. This is a common point of confusion because SSS and PhilHealth read pay differently, and mixing them up throws off both deductions.
| Monthly Basic Salary | Total (5%) | Employee (2.5%) | Employer (2.5%) |
|---|---|---|---|
| 10,000 or below (floor) | 500 | 250 | 250 |
| 20,000 | 1,000 | 500 | 500 |
| 30,000 | 1,500 | 750 | 750 |
| 50,000 | 2,500 | 1,250 | 1,250 |
| 100,000 or above (ceiling) | 5,000 | 2,500 | 2,500 |
Salary: 30,000 pesos per month.
Total premium is 5 percent of 30,000, which is 1,500 pesos.
The employee pays half, 750 pesos, deducted from pay.
The employer pays the other 750 pesos.
Employers remit PhilHealth premiums through the Electronic Premium Remittance System (EPRS). Deadlines follow a schedule keyed to the last digit of the employer’s PhilHealth number, generally in the month after the applicable period. The current circulars and the remittance schedule are published on the PhilHealth website.
If weighing whether to run this in-house or hand it to a provider, the PhilHealth basic-salary rule is a strong test.
If the finance team already knows the difference between basic salary and gross pay for PhilHealth, SSS, and tax purposes, operations can probably stay manageable.
If that sentence raised an eyebrow, an EOR removes the risk entirely.
Pag-IBIG, formally the Home Development Mutual Fund, is a savings and housing program. Contributions build a savings balance that earns annual dividends and unlocks affordable housing loans, multi-purpose loans, and calamity loans. It is mandatory for employees and is the smallest of the three contributions for most people.
The legal basis is Republic Act 9679, the Home Development Mutual Fund Law of 2009. The figures you use today reflect a 2024 update that doubled the contribution ceiling.
Pag-IBIG in 2026 is based on a capped fund salary of 10,000 pesos.
The employee pays 1 percent if monthly pay is 1,500 pesos or below, otherwise 2 percent.
The employer always pays 2 percent. For anyone earning above 10,000 pesos, that works out to 200 pesos each side.
The key change happened in February 2024, when Pag-IBIG Circular 460 raised the maximum fund salary from 5,000 to 10,000 pesos. That doubled the maximum monthly contribution from 100 to 200 pesos per side. The change still applies in 2026.
So the math is short. Almost every full-time employee earns more than 10,000 pesos, which means the contribution is simply 200 pesos from the worker and 200 pesos from the employer. Total of 400 pesos a month credited to the worker’s Pag-IBIG savings.
| Monthly Compensation | Employee Rate | Employee Share | Employer Share |
|---|---|---|---|
| 1,500 and below | 1% | up to 15 | 2% of pay |
| 1,501 to 10,000 | 2% | 2% of pay | 2% of pay |
| Above 10,000 (capped) | 2% of 10,000 | 200 | 200 |
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Pag-IBIG contributions are remitted through Virtual Pag-IBIG. The common deadline is on or before the 10th day of the following month, although the exact date can depend on the first letter of the employer’s name. Verify the current schedule on the Pag-IBIG Fund website.
This is the part that trips up almost everyone, because the rate is not a flat percentage. Withholding tax is graduated, it applies to taxable income rather than gross pay, and the brackets are written in annual terms even though you withhold every payday.
The framework is the TRAIN Law, Republic Act 10963. The brackets in force took effect on 1 January 2023 and continue through 2026. There are no new rates for the year.
You never apply the tax table to gross salary. First you strip out the employee’s mandatory contributions. The formula is plain:
Taxable income = gross compensation minus the employee shares of SSS, PhilHealth, and Pag-IBIG, minus any non-taxable benefits.
Skipping this step is the single most common payroll tax error. If you tax gross pay, you over-withhold every cutoff, the employee’s take-home shrinks, and you create a year-end reconciliation headache. De minimis benefits and the 13th-month pay (up to a 90,000-peso annual cap on 13th-month and other benefits) are also excluded before tax.
The first 250,000 pesos of annual taxable income is tax free.
Income above that is taxed progressively from 15 percent up to 35 percent.
| Annual Taxable Income | Tax Due |
|---|---|
| 0 to 250,000 | 0% |
| Over 250,000 to 400,000 | 15% of the excess over 250,000 |
| Over 400,000 to 800,000 | 22,500 + 20% of the excess over 400,000 |
| Over 800,000 to 2,000,000 | 102,500 + 25% of the excess over 800,000 |
| Over 2,000,000 to 8,000,000 | 402,500 + 30% of the excess over 2,000,000 |
| Over 8,000,000 | 2,202,500 + 35% of the excess over 8,000,000 |
In practice you do not annualize by hand every payday. The BIR publishes derived monthly, semi-monthly, weekly, and daily tables, and payroll runs use the table that matches the pay frequency. At year end the employer runs an annualization, compares total tax withheld against the true annual liability, and either refunds an over-withholding or collects a small shortfall.
Salary: 30,000 pesos per month. Carrying through the earlier deductions.
Employee contributions: SSS 1,500, PhilHealth 750, Pag-IBIG 200. Total 2,450 pesos.
Monthly taxable income: 30,000 minus 2,450, which is 27,550 pesos.
Annual taxable income: 27,550 times 12, which is 330,600 pesos.
That sits in the second bracket. Tax is 15 percent of (330,600 minus 250,000), so 15 percent of 80,600, which is 12,090 pesos for the year.
Monthly withholding: about 1,007.50 pesos.
Withholding tax is remitted to the BIR on Form 1601-C, due by the 10th day of the following month for manual filers and the 15th for those on the electronic filing system. At year end the employer issues each worker a Form 2316, the certificate of compensation and tax withheld, on or before 31 January.
Form 2316 doubles as substitute filing. An employee with a single employer for the whole year, whose tax was correctly withheld and annualized, does not need to file a separate annual return. That is a real convenience for staff and one fewer thing for them to worry about.
Numbers in isolation are easy to misread, so here is the full picture for a 30,000-peso monthly salary. First, what the employee actually takes home.
| Line Item | Amount (PHP) |
|---|---|
| Gross monthly salary | 30,000.00 |
| Less: SSS employee share (5%) | (1,500.00) |
| Less: PhilHealth employee share (2.5%) | (750.00) |
| Less: Pag-IBIG employee share | (200.00) |
| Taxable income | 27,550.00 |
| Less: withholding tax | (1,007.50) |
| Net take-home pay | 26,542.50 |
Now the other side of the ledger, which new employers often forget. The salary is not the cost. The employer adds its own contributions on top, and accrues the 13th-month pay across the year.
| Line Item | Amount (PHP) |
|---|---|
| Gross salary | 30,000.00 |
| SSS employer share (10% + 30 EC) | 3,030.00 |
| PhilHealth employer share (2.5%) | 750.00 |
| Pag-IBIG employer share (2%) | 200.00 |
| Statutory employer add-on | 3,980.00 |
| 13th-month accrual (one twelfth of basic) | 2,500.00 |
| Approximate total monthly cost | 36,480.00 |
The headline takeaway: a 30,000-peso hire costs the employer roughly 36,500 pesos a month once statutory contributions and the 13th-month accrual are included. Budgeting only the salary understates the cost by about 22 percent.
Peorient is an independent advisory platform. Answer a short assessment and get matched with vetted EOR and PEO providers who handle Philippine payroll, contributions, and filings for you.
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Start the free EOR and PEO assessmentRates are only half the job. The other half is paying on time, every month, to four destinations. Here is the calendar in one place.
| Obligation | Form or Channel | Typical Deadline |
|---|---|---|
| SSS contributions | PRN via My.SSS, bank or e-payment | Last day of the following month, by ER number |
| PhilHealth premiums | EPRS | Following month, by employer PIN schedule |
| Pag-IBIG savings | Virtual Pag-IBIG PRN | On or before the 10th of the following month |
| Withholding tax | BIR Form 1601-C | 10th of the following month, 15th on eFPS |
| Year-end tax certificate | BIR Form 2316 | On or before 31 January |
| Annual information return | BIR Form 1604-C plus alphalist | On or before 31 January |
Penalties compound fast. Late or missing remittances draw monthly penalties and surcharges from each agency, and unremitted employee deductions can become a criminal exposure for company officers. The agencies also share data, so a gap rarely stays hidden for long.
Most payroll tax problems are not exotic. They are the same handful of errors, repeated monthly until an audit surfaces them. Watch for these.
None of these are hard once. The difficulty is doing all of them correctly for every employee, every month, while the rates and circulars keep shifting.
That is the real reason companies outsource Philippine payroll rather than the fear of any single calculation.
If your company has no legal entity in the Philippines, you cannot register with SSS, PhilHealth, Pag-IBIG, or the BIR as an employer in the first place. That is the practical wall most foreign companies hit. There are two ways through it.
You can set up a local entity, which gives you full control and makes sense for a long-term, large-headcount presence. It also means months of registration and an in-house payroll function that owns every calculation in this guide.
Or you can hire through an employer of record. The EOR is already registered with all four agencies. It becomes the legal employer, withholds and remits every contribution and tax, issues compliant payslips and the Form 2316, and absorbs the penalty risk if something is late. You direct the employee’s daily work and pay one consolidated invoice. Our guide to what an EOR is walks through the full mechanics.
The catch is that providers vary widely. Some own their Philippine entity, others rent one through a partner, and pricing models are rarely comparable at a glance. This is exactly the gap Peorient was built to close. We are an independent advisory platform, not a provider, so our shortlists are based on fit rather than commission.
Tell us your headcount, budget, and timeline. We match you with three to five vetted providers that genuinely fit, with clear strengths and pricing, so you skip weeks of sales calls.
→ Get your free, matched shortlistPhilippine payroll taxes are not complicated in theory. Four deductions, three agencies, one tax table, paid every month. The difficulty is consistency. Rates move, basic and gross pay are read differently across agencies, and a single missed remittance starts a penalty clock.
Get the framework right and the rest is discipline. Subtract contributions before tax, use the current 2026 rates, respect each cap, and never miss a deadline. If carrying that load in-house does not make sense yet, an employer of record carries it for you and owns the compliance risk.
If you would like a second opinion that is not selling you a platform, get in touch with Peorient, or start the free assessment and see which providers actually fit how you plan to hire in the Philippines.
Employers handle four items: SSS, PhilHealth, and Pag-IBIG contributions, which are shared with the employee, plus withholding tax on compensation, which the employer deducts from the employee and remits to the BIR. The employer also pays a small SSS EC charge on its own.
SSS is 15 percent of the monthly salary credit. The employer pays 10 percent and the employee pays 5 percent, with the salary credit capped between 5,000 and 35,000 pesos. The employer also pays a 10 or 30 peso EC charge.
PhilHealth is 5 percent of monthly basic salary, split evenly so each side pays 2.5 percent. The premium runs from 500 pesos a month at the 10,000-peso floor to 5,000 pesos at the 100,000-peso ceiling.
Pag-IBIG is based on a fund salary capped at 10,000 pesos. The employee pays 2 percent and the employer pays 2 percent, so most workers contribute 200 pesos each side, for 400 pesos total a month.
The employee owes the income tax, but the employer is legally required to withhold it from each paycheck and remit it to the BIR. The first 250,000 pesos of annual taxable income is tax free under the TRAIN Law.
All four are remitted monthly. Withholding tax on Form 1601-C is due by the 10th of the following month, Pag-IBIG by the 10th, and SSS and PhilHealth on schedules tied to the employer's registration number, generally in the following month.
Each agency charges monthly penalties, interest, or surcharges, and unremitted employee deductions can expose company officers to liability. The agencies share information, so gaps tend to surface during audits or benefit claims.
Not directly, because you must be a registered employer to remit contributions and taxes. The common solution is to hire through an employer of record, which is already registered and handles every filing on your behalf.
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