Eric T. Dykimching | Troy John G. Butac
The Bureau of Internal Revenue has issued Revenue Regulations No. 29-2025 (“RR 29-2025”), which took effect on 06 January 2026, increasing the tax-exempt thresholds of certain de minimis benefits.
De minimis benefits refer to facilities or privileges of relatively small value furnished by employers to their employees on account of their employment relationship to promote the latter’s health, goodwill, contentment and efficiency. These benefits are not subject to income tax, withholding tax on compensation, and fringe benefit tax if they do not exceed the ceilings prescribed under applicable rules.
RR 29-2025 increased the ceilings of the following de minimis benefits:
- Monetized unused vacation leave credits of private-sector employees are now exempt from tax up to twelve (12) days per year, increased from the previous limit of ten (10) days.
- Medical cash allowance to dependents of employees has been raised to Two Thousand Pesos (PhP2,000.00) per employee per semester from the former ceiling of One Thousand Five Hundred Pesos (PhP1,500.00).
- Rice subsidy of Two Thousand Pesos (PhP2,500.00), higher than the previous Two Thousand Pesos (PhP2,000.00) monthly limit.
- Uniform and clothing allowance of up to Eight Thousand Pesos (PhP8,000.00) per annum, an increase from the previous ceiling of Seven Thousand Pesos (PhP7,000.00).
- Actual medical assistance of up to Twelve Thousand Pesos (PhP12,000.00) per annum, up from the previous ceiling of Ten Thousand Pesos (PhP10,000.00).
- Laundry allowance of Four Hundred Pesos (PhP400.00) per month, from the previous ceiling of Three Hundred Pesos (PhP300.00).
- Employees’ achievement awards of up to Twelve Thousand Pesos (PhP12,000.00) per year, from the previous ceiling of Ten Thousand Pesos (PhP10,000.00).
- Gifts given during Christmas and major anniversary celebrations not exceeding Six Thousand Pesos (PhP6,000.00) per employee per year, which is higher than the previous cap of Five Thousand Pesos (PhP5,000.00) per employee per year.
- Daily meal allowance for overtime work and night/graveyard shift of up to thirty percent (30%) of the basic minimum wage per region, from the previous twenty-five percent (25%) cap.
- Benefits received by an employee by virtue of a collective bargaining agreement (CBA) and productivity incentive scheme are also covered by the tax exemption, provided the combined total value received does not exceed Twelve Thousand Pesos (PhP12,000.00) per employee per taxable year, up from the previous ceiling of Ten Thousand Pesos (PhP10,000.00) per employee per taxable year.