Philippine Payroll Calculation: SSS, PhilHealth, Pag-IBIG Explained

Payroll is one of the most regulated areas of running a business in the Philippines. Get it wrong and you face employee complaints, BIR deficiency assessments, and fines from SSS, PhilHealth, and Pag-IBIG. Get it right and your employees trust you, your books are clean, and government remittances are on autopilot.

This guide walks through the complete payroll calculation for a Filipino employee — from gross pay to net pay — and shows what it costs the employer on top of that. We'll use a real example throughout: Marco dela Cruz, a full-time staff at a small Quezon City bakery earning ₱25,000 per month basic salary.

The Four Deductions in Philippine Payroll

Every regular employee's payslip has four main deductions before you arrive at net pay:

1. SSS — Social Security System contributions (employee share)
2. PhilHealth — Philippine Health Insurance contributions (employee share)
3. Pag-IBIG (HDMF) — Home Development Mutual Fund contributions (employee share)
4. Withholding Tax on Compensation — income tax withheld monthly per BIR tables

SSS Contributions (2024 Rate Schedule)

SSS uses a salary bracket table to determine contributions. The key figures as of 2024:

• Total contribution rate: 14% of Monthly Salary Credit (MSC)
• Employee share: 4.5% of MSC
• Employer share: 9.5% of MSC
• MSC range: ₱4,000 (minimum) to ₱30,000 (maximum)

For Marco earning ₱25,000 basic salary:

• His MSC = ₱25,000 (falls within the table's applicable bracket)
• Employee SSS contribution = ₱25,000 × 4.5% = ₱1,125.00
• Employer SSS contribution = ₱25,000 × 9.5% = ₱2,375.00
• Total SSS contribution for Marco = ₱3,500.00

SSS salary credit table snapshot (2024 — always verify with sss.gov.ph for current rates):

PhilHealth Contributions (2024 Rate)

PhilHealth uses a percentage of the employee's basic monthly salary:

• Rate: 5% of basic monthly salary (both 2024 and 2025)
• Employee share: 2.5% of basic salary
• Employer share: 2.5% of basic salary
• Monthly salary floor: ₱10,000 (minimum MSC for PhilHealth)
• Monthly salary ceiling: ₱100,000 (maximum MSC)
• Maximum monthly contribution (employee share): ₱2,500

For Marco at ₱25,000 basic:

• Employee PhilHealth = ₱25,000 × 2.5% = ₱625.00
• Employer PhilHealth = ₱25,000 × 2.5% = ₱625.00
• Total PhilHealth = ₱1,250.00

Pag-IBIG (HDMF) Contributions

Pag-IBIG contributions are simpler:

• Rate: 2% of monthly compensation, for monthly compensation of more than ₱1,500
• Employee share: 2%
• Employer counterpart: 2%
• Contribution base cap: First ₱5,000 of monthly compensation (both employee and employer compute on up to ₱5,000)

Wait — this is commonly misunderstood. The 2% rate applies to the first ₱5,000. For salaries above ₱5,000, only the first ₱5,000 is used for the required contribution. Employees may voluntarily contribute more.

For Marco at ₱25,000:

• Mandatory contribution base = ₱5,000 (capped)
• Employee Pag-IBIG = ₱5,000 × 2% = ₱100.00
• Employer Pag-IBIG = ₱5,000 × 2% = ₱100.00

Withholding Tax on Compensation

This is the most complex part of payroll. The BIR requires employers to withhold income tax from employees' salaries monthly, using the graduated TRAIN Law tax table.

The annual income tax table under TRAIN (Republic Act 10963) effective 2023 onwards:

For monthly withholding computation, BIR provides the Revised Withholding Tax Table in RR 11-2018, which annualizes the monthly compensation and then divides by 12. Here is the monthly version of the table for regular employees (for reference):

Computing Marco's monthly withholding tax:

First, compute taxable compensation:

Monthly Basic Salary:              ₱25,000.00
Less: SSS employee share:         -₱1,125.00
Less: PhilHealth employee share:    -₱625.00
Less: Pag-IBIG employee share:      -₱100.00
= Monthly Taxable Compensation:   ₱23,150.00

Apply the monthly tax table:

• Taxable compensation = ₱23,150.00
• This falls in the bracket: Over ₱20,833 to ₱33,333
• Tax = 15% × (₱23,150 − ₱20,833) = 15% × ₱2,317 = ₱347.55

Round to the nearest peso: ₱348

Complete Payslip for Marco dela Cruz

Employee:       Marco dela Cruz
Period:         January 2025
Basic Salary:   ₱25,000.00

EARNINGS
Basic Pay                           ₱25,000.00
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
GROSS PAY                           ₱25,000.00

DEDUCTIONS
SSS Employee Contribution            ₱1,125.00
PhilHealth Employee Contribution       ₱625.00
Pag-IBIG Employee Contribution         ₱100.00
Withholding Tax on Compensation        ₱348.00
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
TOTAL DEDUCTIONS                     ₱2,198.00
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
NET PAY                             ₱22,802.00

What This Costs the Employer

Here's the full picture — what the bakery actually pays to employ Marco at ₱25,000 basic:

Marco's Basic Salary:              ₱25,000.00

EMPLOYER COUNTERPART CONTRIBUTIONS:
SSS Employer Share:                 ₱2,375.00
SSS EC Fund:                           ₱30.00
PhilHealth Employer Share:            ₱625.00
Pag-IBIG Employer Share:              ₱100.00
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
Total Employer Contributions:       ₱3,130.00
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
TOTAL COST TO EMPLOY MARCO:        ₱28,130.00

The employer's total cost is ₱28,130, not ₱25,000. For every ₱100 in basic salary, the employer pays roughly ₱112.50 in total employment cost. This is important for budgeting headcount.

Government Remittance Deadlines

All four agencies have specific remittance deadlines based on the last digit of the employer's SSS number or TIN. The general schedule:

SSS Remittance (monthly)

Due dates are staggered by the 10th digit of the employer SSS number:

• SSS Number ends in 1–2: 10th of following month
• SSS Number ends in 3–4: 15th of following month
• SSS Number ends in 5–6: 20th of following month
• SSS Number ends in 7–8: 25th of following month
• SSS Number ends in 9–0: Last day of following month

PhilHealth Remittance (monthly)

• Due: 10th of the month following the applicable period, for all employers
• Pay via PhilHealth-accredited banks or via PhilHealth's EPRS online portal

Pag-IBIG Remittance (monthly)

• Due dates by employer ID number — similar staggered system
• General rule: by the 10th or 15th of the following month
• Pay via Pag-IBIG accredited banks, their branch network, or virtual Pag-IBIG online

BIR Withholding Tax (monthly — Form 1601-C)

• Due: 10th of the following month (January withholding → remit by February 10)
• File Form 0619E (monthly eFiling) via eBIRForms and pay via eFPS or GCash

Semi-Monthly vs. Monthly Payroll

Many Philippine businesses pay twice a month — on the 15th and the last day. The deduction logic is the same; you split the monthly contributions across two payroll runs.

Common approach for semi-monthly:

• 1st payroll (15th): Deduct SSS, PhilHealth, and Pag-IBIG employee shares in full.
• 2nd payroll (30th/31st): Deduct withholding tax.

Some businesses split all deductions evenly across both payrolls. Either approach works as long as the total monthly deductions are correct.

The 13th Month Pay

Under PD 851, all rank-and-file employees are entitled to 13th month pay equivalent to at least 1/12 of their total basic salary for the year. It must be paid by December 24.

13th Month Pay = (Total Basic Salary Earned in the Year) ÷ 12

For Marco earning ₱25,000/month for all 12 months: 13th Month Pay = ₱300,000 ÷ 12 = ₱25,000

Tax treatment: The first ₱90,000 of 13th month pay (and other benefits) is tax-exempt under TRAIN Law. For Marco, the full ₱25,000 is exempt.

Summary: Payroll Formula

Gross Pay (Basic + Allowances + OT + Holiday Pay)
- SSS Employee Share
- PhilHealth Employee Share
- Pag-IBIG Employee Share
- Withholding Tax on Compensation
= NET PAY

Employer's Full Cost:
Gross Pay + SSS Employer Share + EC Fund + PhilHealth Employer Share + Pag-IBIG Employer Share

Payroll is mechanical once you understand the inputs. The variables that change are: salary increases, status changes (married vs. single affects withholding tax brackets for additional exemptions), and government-mandated rate adjustments each year. Keeping your payroll system updated to the latest contribution tables is the most important maintenance task — Akauntants updates these automatically when BIR and the agencies publish new rates.