Executive Summary

The Bureau of Internal Revenue (BIR) has issued Revenue Regulations (RR) No. 29-2025,
introducing significant updates to the ceilings of De Minimis benefits. These adjustments
respond to current economic conditions and the rising cost of living, aiming to provide
employees with better financial support without increasing their tax burden.

Legal Basis and Definition

Statutory Authority: De Minimis benefits are grounded in Section 33(C)(4) of the National
Internal Revenue Code (NIRC), as amended.

Definition: These refer to facilities or privileges of relatively small value furnished by
employers to employees.

Tax Treatment: These benefits are exempt from income tax and withholding tax on
compensation, provided they remain within the ceilings prescribed by the Bureau of
Internal Revenue.

Comparative Analysis: Key Adjustments

Daily Living and Subsistence Support:

• Rice Subsidy: Increased from ₱2,000 to ₱2,500 per month.
• Laundry Allowance: Raised from ₱300 to ₱400 per month.
• Uniform & Clothing Allowance: Increased to ₱8,000 per year.
• Daily Meal Allowance (OT/Night Shift): Increased from 25% to 30% of the basic minimum
• wage.

Health and Wellness:

• Medical Cash Allowance to Dependents: Increased to ₱2,000 per semester.
• Actual Medical Assistance: Increased to ₱12,000 per year.

Leave Monetization:

• Private Employees: Expanded from 10 days to 12 days per year.
• Government Employees: Remains fully exempt.

Rewards and Incentives:

• Christmas & Anniversary Gifts: Increased to ₱6,000 per year.
• Employee Achievement Awards: Increased to ₱12,000 per year.
• CBA & Productivity Incentives: Increased to ₱12,000 per year.

Educational Insight: Tax Treatment of Excess Amounts

Amounts within the prescribed ceilings under RR No. 29-2025 are excluded from taxable compensation income. Any excess over the prescribed limits is treated as taxable compensation. In practice, excess De Minimis benefits are typically included under the 13th Month Pay and Other Benefits category, subject to the ₱90,000 exemption threshold.

Conclusion and Strategic Implications

RR No. 29-2025 enhances compliance safety by reducing unintended tax exposure and allows employers to improve workforce retention through competitive, tax-efficient compensation structures. Employers should update payroll systems promptly to reflect these revised ceilings.

Disclaimer:

The information provided herein is intended for general informational purposes only and reflects the current understanding of the given topic. It is subject to change in response to updates in laws or regulations. This material does not constitute legal or financial advice. For tailored advice, please contact De Guzman Pascual and Associates CPAs at [email protected]. The views expressed do not necessarily represent any official position of governmental or financial entities.