Is the 13th month pay taxable?
Although the 13th Month Pay is promising, especially to the rank and file employees, it is taxable. … Unless this occurs, you will be entitled to receive your 13th month’s salary in full, tax-free.
How is 13th month calculated in Nigeria?
The 13th-month pay is computed based on 1/12 of the total basic salary of an employee within a calendar year, or your basic monthly salary for the whole year divided by 12 months. To put it simpler, just get the sum of your basic salary for the calendar year then divide it by twelve.
Is 13th month pay gross or net?
Note that 13th-month pay is computed as the number of months rendered by the employee which means additional holiday pays and premiums will not be included in the computation. The formula is total basic salary minus total of salary deductions including absences, lates, and undertime over 12 months.
What part of salary is taxable in Nigeria?
Tax rates. Taxable income is assessed to tax at graduated rates ranging from 7 percent to 24 percent, depending on the income band being assessed. Non-residents are subject to the same tax rates as residents. The maximum tax rate is currently 24 percent of an individual’s income.
What is included in 13th month pay?
The amount of 13th month pay shall at least be 1/12 of the total basic salary earned for the year which shall n include all earnings paid by his/her employer for services rendered but does not include allowances and other monetary benefits such as the cash equivalent of unused vacation and sick leave credits, overtime, …
What is a 13 month salary?
What does 13th month salary mean? A 13th month salary—also known as 13 month pay—is an extra paycheck that is typically equal to one month’s salary. It is paid in addition to your employee’s annual salary. This tradition started in the Philippines in the 1970s and has since spread to other countries.
How is 13th month pay tax calculated?
To compute for your 13th-month pay, you divide your total basic salary earned for the year by 12. Take note that your basic salary excludes other earnings such as allowances, and overtime pay.
Is 13th month pay same as bonus?
13th month pay isn’t just a bonus – it’s more complicated than that. … But this doesn’t mean it’s treated as a bonus or commission. It’s not the same as holiday pay, either – i.e. the pay employees are entitled to when taking holiday leave.
How is 13th month pay as per Dole calculated?
Under the law, the 13th-month pay shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year. “Total basic salary earned during the year (12 months) = proportionate 13th-month pay,” it said.
What is the cut off of 13th month pay?
When should the 13th month pay be paid? It should be paid not later than December 24 of each year. An employer, however, may give to his employees one-half of the 13th month pay before the opening of the regular school year and the other half on or before the 24th day of December of every year.
How is 13th month pay calculated with salary increase?
You just have to compute all your earnings (excluding earnings not considered part of your basic salary) within a calendar year and divide it by 12. The total is the corresponding 13th-month pay that must be paid to you by your employer.
How much basic salary is taxable?
Basic salary is fully taxable. Basic salary forms the core of the salary structure, constituting for 40-45% of the total CTC. Other salary components like Gratuity, Provident Fund and ESIC are determined according to the basic salary.
How is my salary taxed?
The federal individual income tax has seven tax rates ranging from 10 percent to 37 percent (table 1). The rates apply to taxable income—adjusted gross income minus either the standard deduction or allowable itemized deductions. Income up to the standard deduction (or itemized deductions) is thus taxed at a zero rate.