Updated De-Minimis Provisions – Increased Ceiling of Non-Taxable Benefits in the Philippines

The Bureau of Internal Revenue (BIR) has updated the De Minimis provisions, increasing the limits for non-taxable employee benefits in the Philippines. The BIR issued Revenue Regulation (RR) No. 29-2025 on December 22, 2025. The regulation takes effect 15 days after its publication. 

Under the revised rules, these benefits—considered minor facilities or privileges—remain exempt from income tax on compensation and fringe benefit tax. The amendments expand coverage to various employee perks, including higher allowances for rice, clothing, medical assistance, and laundry, as well as increased limits for monetized leave credits and achievement awards.

Section 2.78.1 of RR No. 2-98, as amended by  RR No. 004-2025, has been further amended as follows:  

“Section 2.78.1. Withholding of Income Tax on Compensation Income. – 
(A) Compensation Income Defined. – xxx 
xxx    xxx    xxx
(3) Facilities and privileges of relatively small value. -  xxx 

a.) Monetized unused vacation leave credits of private employees  not exceeding twelve (12) days during the year; 

b.) Monetized value of vacation and sick leave credits paid to government officials and employees ;

c.) Medical cash allowance to dependents of employees  not exceeding PHP 2,000.00 per employee per semester or PHP 333.00 per month;

d.) Rice subsidy of PHP 2,500.00 or one (1) sack of 50kg. rice per month amounting to not more than PHP 2,500.00;

e.) Uniform and clothing allowance  not exceeding PHP 8,000.00 per annum;

f.) Actual medical assistance, e.g., medical allowance to cover medical and healthcare needs, annual medical/executive check-up, maternity assistance, and routine consultations not exceeding PHP 12,000.00 per annum;

g.) Laundry allowance not exceeding PHP 400.00 per month;

h.) Employee's achievement awards, e.g., for length of service or safety achievement, in any form, whether in cash, gift certificate, or any tangible personal property, with an annual monetary value not exceeding PHP 12,000.00 received by the employee under an established written plan which does not discriminate in favor of highly paid employees;

i.) Gifts given during Christmas and major anniversary celebrations not exceeding PHP 6,000.00 per employee per annum; 

j.) Daily meal allowance for overtime work and night/graveyard shift not exceeding thirty percent (30%) of the basic minimum wage on a per region basis; and 

k.) Benefits by an employee by virtue of a collective bargaining agreement (CBA) and productivity incentives scheme provided that the total annual monetary value received from both CBA and productivity incentive schemes combined do not exceed twelve thousand pesos PHP 12,000.00 per employee per taxable year;

Comparison Table: Old vs. New De Minimis Thresholds

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