De Minimis Benefits and the ₱90,000 Tax-Free Rule

Not every peso an employer gives you is taxed. A set of small benefits, called de minimis benefits, are tax-free up to fixed ceilings, and anything above them lands in a separate bucket that has its own tax-free limit.

What de minimis benefits are

These are modest, everyday benefits the BIR lets pass without tax, each with its own ceiling. Common ones include a rice subsidy, a uniform or clothing allowance, medical assistance, a laundry allowance, and the cash value of a few unused leave days. As long as each stays within its ceiling, it is not taxed and does not form part of the base for your contributions.

The ceilings changed for 2026

The ceilings were raised starting January 2026. A few of the current figures: the rice subsidy ceiling is ₱2,500 a month, the uniform and clothing allowance is ₱8,000 a year, medical assistance is ₱12,000 a year, and the laundry allowance is ₱400 a month. Older articles still quoting ₱2,000 for rice or ₱7,000 for uniforms are working from the previous ceilings.

When a benefit goes over its ceiling

If a benefit exceeds its own de minimis ceiling, only the excess is taxed, and even then not right away. The excess joins your 13th month pay and other bonuses in a combined bucket that is tax-free up to ₱90,000 a year. Only the amount past that ₱90,000 becomes taxable income.

Why it matters on a payslip

This two-layer setup is why a genuine allowance within the ceilings arrives in full, untouched. It is also why a large allowance is not a clean substitute for salary: past the ceiling it starts eating into the ₱90,000 room your 13th month pay usually fills. If your allowance runs high, it is worth checking how much of it is truly tax-free.

To see how an allowance affects your net, use the take-home pay calculator, and the 13th month pay calculator for the year-end side.