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The Philippine Bureau of Internal Revenue issued Revenue Regulations No. 29-2025, raising tax-exempt thresholds for various de minimis benefits. Key changes include: daily meal allowance increased to 30% of basic minimum wage (from 25%), clothing allowance raised to PHP 8,000/year (from PHP 7,000), employee achievement awards to PHP 12,000/year (from PHP 10,000), medical cash allowance to PHP 333/month (from PHP 250), rice allowance to PHP 2,500/month (from PHP 2,000), and unused vacation leave credits to 12 days/year (from 10 days). These benefits remain tax-free up to the new limits and are separate from the PHP 90,000 tax-exempt ceiling for bonuses.
Philippines increases tax-free de minimis benefit limits effective January 6, 2026
On January 6, 2026, the Philippine Bureau of Internal Revenue implemented Revenue Regulations No. 29-2025, raising tax-exempt thresholds for de minimis benefits. The daily meal allowance for overtime and night shift work increased to 30% of the basic minimum wage (from 25%), rice allowance rose to PHP 2,500 per month (from PHP 2,000), and annual unused vacation leave credits expanded to 12 days (from 10 days), among other changes.
Who is affected
All employers in the Philippines who provide de minimis benefits to employees are affected by these changes. De minimis benefits are small routine benefits or one-time awards provided in addition to basic salary. These benefits are treated separately from the PHP 90,000 tax-exempt ceiling for bonuses and other incentives.
What's changing
The Bureau of Internal Revenue has increased tax-exempt limits across ten categories of de minimis benefits:
| De Minimis Benefit | New Limit (Jan 6, 2026) | Previous Limit |
|---|---|---|
| Daily meal allowance (overtime/night shifts) | 30% of basic minimum wage | 25% of basic minimum wage |
| Clothing allowance | PHP 8,000 per year | PHP 7,000 per year |
| Employee achievement awards | PHP 12,000 per year | PHP 10,000 per year |
| Gifts (Christmas/major anniversaries) | PHP 6,000 per year | PHP 5,000 per year |
| Laundry allowance | PHP 400 per month | PHP 300 per month |
| Medical cash allowance | PHP 333 per month | PHP 250 per month |
| Medical assistance | PHP 12,000 per year | PHP 10,000 per year |
| Rice allowance | PHP 2,500 per month | PHP 2,000 per month |
| Annual unused vacation leave | 12 days per year | 10 days per year |
| CBA and productivity incentive benefits | PHP 12,000 per year | PHP 10,000 per year |
Benefits provided within these new limits remain tax-free for employees and are not subject to withholding tax.
What NEO partners and clients should do
- Review current employee benefit structures against the new thresholds by January 6, 2026
- Update payroll systems and internal policies to reflect the increased limits
- Communicate the changes to employees, highlighting any increases in tax-free benefit allowances
- Ensure withholding tax calculations exclude de minimis benefits up to the new limits starting January 6, 2026
