Standard Deduction
from Salaries and
Wages
GROUP 3
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Net Earnings
Withholding Tax
PhilHealth
Social Security
System (SSS)
Pag-IBIG
Net Earnings
Net earnings or Net incomes refer to the amount
that an employee actually receives after all the
deductions have been made.
It is the take-home pay of an employee.
The standard deductions are those mandated by
law or by the government such as the
withholding tax; and Social Security System
(SSS), PhilHealth, and Pag-IBIG contributions.
Withholding Tax
Withholding tax is the amount deducted by
the employer from the employee's salary or
which the former uses to pay in advance the
income tax imposed by the government.
EXAMPLE #1
Margareth, nurse in Saudi Arabia earns ₱695,064 annually.
How much will be deducted from her salary due to the
withholding tax? And how much will be left from her salary?
EXAMPLE #2
Mary, a public school teacher receives ₱35,000 as her
regular monthly wage. How much is her prescribed minimum
withholding tax?
Social Security System (SSS)
The Social Security System (SSS) is the
agency that implements a social security
program for the employees of the private
sector or voluntary citizens.
SSS offers social insurance to private,
public, professional, and informal sectors.
Members pay a monthly contribution to this
government agency, and SSS uses it to
provide benefits like retirement pensions
and salary loans.
It is a guide to help you compute your SSS
monthly contribution.
1. Range of Compensation – This is the category where your monthly salary
belongs.
2. Social Security – EE. This is the column "Employee contribution— EE",
basically the amount of your personal SSS contribution as an employee.
3. Social Security – ER. This is the column “SS Contribution-ER”, the
counterpart contribution of your employer.
4. EC Contribution – This represents contributions for the “Employees’
Compensation”. The EC contribution is solely paid by the employer, except
for Self-Employed which is paid by the self-employed member.
5. Mandatory Provident Fund – Beginning January 2021, all SSS members
receiving monthly compensation of at least P20,000 are required to pay
the mandatory Provident Fund contribution.
6. Total Contribution (Total) – This shows the full amount of your SSS
contribution, combining both your personal contributions and your
employer’s counterpart payment, if applicable.
As of 2021, SSS contribution rate...
Contribution Rate (has no ER) = 13%
Employers (ER) = 8.5%
Employees (EE) = 4.5%
you will pay an extra ₱10 if your
MSC is below ₱15,000 and;
— ₱30 for an MSC amount of
₱15,000 and above.
EXAMPLE #1
Mia has a small café in province. Her monthly income
reaches ₱13,000. How much will be the monthly contribution
amount of Mia?
Solution:
Monthly Contribution Amount = MSC x Contri. Rate
= (₱13,000 x 0.13) + ₱10 (EC contri)
= ₱1,690.00 + ₱10 (EC contri)
Therefore, her monthly
contribution amount will
= ₱1,700.00
be ₱1,700.00.
EXAMPLE #2
Mrs. Suarez works as a BPO call center agent in the Philippines. Her gross
monthly compensation is ₱24,000. How much will be deducted from his
salary as SSS contribution (EE Share)? How much is the Employer share (ER
Share)? How much will the employer remit in total to SSS?
Solution:
Total Monthly Contribution = MSC x Contri. Rate
ER
= (₱24,000 x 0.085) + 30
= 2,040 + 30 (EC contri.)
= ₱2,070
EE
= ₱24,000 x 0.045
= ₱1,080.00
Total Monthly Contribution
= 1,080 + 2,070
= ₱3,150.00
Therefore, his salary as Employee's
contribution, will be deducted in the
amount of ₱1,080.00. And as employer's
contribution, the amount that will be
deducted is ₱2,040.00. And the total
monthly contribution or the total employer
remit will be ₱3,150.00.
EXAMPLE #3
Miss DH is a land-based OFW working as a domestic helper
in Hong Kong. She receives monthly salary of P25,000 per
month. How much is her total monthly contribution in SSS?
Solution:
Total Monthly Contribution = MSC x Contri. Rate
= (20,000 x 0.13) + 650
= 2,600 + 650 (MPF)
= ₱3,250.00
Therefore, Miss DH will have to pay the
entire SSS contribution of P3,250.00
every month.
EXAMPLE #4
Yaya Dub is a kasambahay employed by Mr. Alden. Yaya
Dub earns gross salary of ₱21,000 per month. How much is
Yaya Dub’s SSS contribution?
Solution:
Total Monthly Contribution = MSC x Contri. Rate
ER
= ₱20,500 x 0.085
= 1,742.5 + 30 (EC contri.)
= ₱1,772.50
EE
= ₱20,500 x 0.045
= ₱922.50
Total Monthly Contribution
= 1,772.5 + 922.5
= ₱2,695.00
Therefore, the total amount to be
remitted to SSS as total contribution by
Yaya Dub is P2,695.00 per month.
PhilHealth
Employees who are members of SSS are
automatically covered by the national
health insurance program of the Philippine
Health Insurance Corporation (PhilHealth).
There is a unified benefit package of
personal health services for all PhilHealth
members that includes hospital care and
outpatient care. Monthly contributions are
paid both by the employer and the
employee. The PhilHealth contribution is
also based on the compensation of the
employee.
EXAMPLE #1
Determine the employee's PhilHealth contribution that will be
deducted if his regular monthly compensation is ₱21, 333.33.
How much is the employer's contribution counterpart? What is
the total monthly contribution that will be credited in the
employee's PhilHealth contribution?
EXAMPLE #1
Determine the employee's PhilHealth contribution that will be
deducted if his regular monthly compensation is ₱21, 333.33.
How much is the employer's contribution counterpart? What is
the total monthly contribution that will be credited in the
employee's PhilHealth contribution?
Given:
21,333.33
4%
50%
EXAMPLE #1
Determine the employee's PhilHealth contribution that will be
deducted if his regular monthly compensation is ₱21, 333.33.
How much is the employer's contribution counterpart? What is
the total monthly contribution that will be credited in the
employee's PhilHealth contribution?
Given:
21,333.33
4%
50%
Solution:
Total monthly Philhealth contribution =
4% of the monthly compensation
= 21,333.33 x 0.04
= ₱853.33
EXAMPLE #1
Determine the employee's PhilHealth contribution that will be
deducted if his regular monthly compensation is ₱21, 333.33.
How much is the employer's contribution counterpart? What is
the total monthly contribution that will be credited in the
employee's PhilHealth contribution?
Given:
21,333.33
4%
50%
Solution:
Total monthly Philhealth contribution =
4% of the monthly compensation
Employee and Employer contribution
= 50% of the total monthly PhilHealth
contribution
= 21,333.33 x 0.04
= ₱853.33
= 853.33 x 0.50
= ₱426.67
EXAMPLE #2
Determine Jose, Angelo and Jacob’s Philhealth contribution that will
be deducted if their regular monthly compensation is ₱100,000,
₱120,000, and ₱150,000 each. How much is Jose, Angelo, and
Jacob’s contribution counterpart? What is the total monthly
contribution that will be credited in the employee’s Philhealth
contribution?
EXAMPLE #2
Determine Jose, Angelo and Jacob’s Philhealth contribution that will
be deducted if their regular monthly compensation is ₱100,000,
₱120,000, and ₱150,000 each. How much is Jose, Angelo, and
Jacob’s contribution counterpart? What is the total monthly
contribution that will be credited in the employee’s Philhealth
contribution?
Given:
Jose = ₱100,000
Angelo = ₱120,000
Jacob= ₱150,000
4%
50%
EXAMPLE #2
Determine Jose, Angelo and Jacob’s Philhealth contribution that will
be deducted if their regular monthly compensation is ₱100,000,
₱120,000, and ₱150,000 each. How much is Jose, Angelo, and
Jacob’s contribution counterpart? What is the total monthly
contribution that will be credited in the employee’s Philhealth
contribution?
Given:
Jose = ₱100,000
Angelo = ₱120,000
Jacob= ₱150,000
4%
50%
Total monthly Philhealth
contribution = 4% of the monthly
compensation
Jose = P100,000 x 0.04
= ₱4,000
Angelo = 120,000 x 0.04
= ₱4,800
Jacob = 150,000 x 0.04
= ₱6,000
EXAMPLE #2
Determine Jose, Angelo and Jacob’s Philhealth contribution that will
be deducted if their regular monthly compensation is ₱100,000,
₱120,000, and ₱150,000 each. How much is Jose, Angelo, and
Jacob’s contribution counterpart? What is the total monthly
contribution that will be credited in the employee’s Philhealth
contribution?
Given:
Jose = ₱100,000
Angelo = ₱120,000
Jacob= ₱150,000
4%
50%
Total monthly Philhealth
contribution = 4% of the monthly
compensation
Jose = P100,000 x 0.04
= ₱4,000
Angelo = 120,000 x 0.04
= ₱4,800
Jacob = 150,000 x 0.04
= ₱6,000
Employee and Employer
contribution = 5O% of the total
monthly Philhealth contribution.
Jose = 0.50 x P 4,000
= ₱2,000
Angelo = 0.50 x P 4,800
= ₱2,400
Jacob = 0.50 x 6,000
= ₱3,000
Pag-IBIG or Home Development
Mutual Fund
is a mutual provident savings system for
private and government groups. The
employer and the employee pay monthly
premiums.
EXAMPLE #1
If you earn ₱35,000 monthly, how much is your HDMF or Pag IBIG fund
contribution that will be deducted from your salary? And your employee has a
50% contribution and also the employeer has a 30% of contribution. What will
be your total monthly contribution that will be credited in HDMF or Pag IBIG
fund?
EXAMPLE #1
If you earn ₱35,000 monthly, how much is your HDMF or Pag IBIG fund
contribution that will be deducted from your salary? And your employee has a
50% contribution and also the employeer has a 30% of contribution. What will
be your total monthly contribution that will be credited in HDMF or Pag IBIG
fund?
Given:
₱35,000
EE - 50% —> 0.5
ER - 30% —> 0.3
Solution:
HDMF/Pag IBIG fund continued = (35,000 x 0.5) (0.3)
= 17,500 x 0.3
= ₱5,250
EXAMPLE #2
Pag IBIG fund posted earnings of ₱1,000,000 in the first half
of 2022, an impressive 27% increased compared to the
same period last year, what will be your total earnings in
Pag IBIG fund?
EXAMPLE #2
Pag IBIG fund posted earnings of ₱1,000,000 in the first half
of 2022, an impressive 27% increased compared to the
same period last year, what will be your total earnings in
Pag IBIG fund?
Given:
₱1,000,000
27% —> 0.27
Solution:
Pag IBIG fund = 1,000,000 x 0.27
= 270,000
EXAMPLE #3
Pag IBIG fund began operations at the beginning of the current year, at the
same year of operation, the employee share/ contribution has 3,700 and
the employer has 3,700 share/ contribution, and you have also 4,250 for
the dividends. And you have 80% from employee and employer. So what will
be total of accumulated value?
EXAMPLE #3
Pag IBIG fund began operations at the beginning of the current year, at the
same year of operation, the employee share/ contribution has 3,700 and
the employer has 3,700 share/ contribution, and you have also 4,250 for
the dividends. And you have 80% from employee and employer. So what will
be total of accumulated value?
Given:
EE - 3,700
ER - 3,700
dividends - 4,250
80% —> 0.8
SOLUTION:
= (3,700 + 3,700) + 4,250
= 7,400 + 4,250
= 11,650 —> cumulative balance
X 80 or 0.8
= 9,320 accumulated value
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