De minimis benefits is one of the many perks that employees enjoy, through cash or in kind. The Philippine Labor Law defines this as small-value benefits awarded by employers as compensation, which are generally not subject to taxes. Its purpose is to promote the health, morale, and goodwill of the employees. Furthermore, its characteristics are: minimal in value, non-taxable (under a ceiling), and are different from fringe benefits which are subject to taxes.
Legal Framework
The Labor Code recognizes this as part of the employee compensation packages. De minimis benefits are also governed by the BIR Revenue Regulations wherein it provides the list of what qualifies as de minimis benefits and their corresponding ceilings. While the Section 33 of the National Internal Revenue Code mostly discusses fringe benefits, it also talks about those that are not subject to fringe benefit taxes such as de minimis benefits1.
Coverage and Scope
De minimis benefits can be availed by both managerial employees and rank-and-file ones. They are generally exempt from income tax, withholding tax, and fringe benefit tax as they are small or minimal in value for taxation. However, this is only applicable under a certain threshold, and would be subject to tax when it exceeds. Its general limitations set by the Bureau of Internal Revenue are the monetary value ceilings, and each benefit is treated independently with its own cap.
List of Benefits and their Threshold
Below are the list of de minimis benefits with each of their corresponding.
| BENEFITS | THRESHOLD |
| Monetized unused leaves | Up to 10 days |
| Rice subsidy | Php 2,000/month |
| Uniform and clothing allowance | Php 7,000/year |
| Medical cash allowance to dependents | Php1,500/semester or Php 250/month |
| Employee achievement awards | Php 10,000/year in the form of tangible items |
| Christmas and major anniversary gifts | Php 5,000 per employee per year |
| Actual medical assistance | Php 10,000/year |
| Laundry allowance | Php 300/month |
| Under the Collective Bargaining Agreement and Productivity Incentive Schemes | Php 10,000/year (combined) |
| Other items recognized by the Bureau of Internal Revenue |
Key Provisions or Updates
Beginning January to February 2025, some of the threshold stipulated in the de minimis benefits had been updated, as provided by BIR. Prior to the aforementioned date, the clothing allowance was capped at Php 6,000 only. Additionally, employee achievement awards were only allowed to be given as tangible items. With the BIR RR No. 4-2025, it awarded improvements in the threshold of the said de minimis benefits, uniform allowance was increased to Php 7,000 from Php 6,000; and employee awards are not just limited to tangible items anymore, but also include cash or gift certificates2.
Benefits
De minimis benefits awarded to employees are not just beneficial to them, but also to their employer. For the former, it shall boost their satisfaction and morale in the workplace as they are provided with more benefits, it reduces their tax liabilities even with additional benefits, consequently this increases their take-home pay, and the like. As for the employers, this can be a cost-effective way for them to provide additional compensation and boost their employees’ retention while not having to pay additional taxes. Additionally, this can help them be attractive and retain their employees in a competitive job market.
- Philippines. (1997). National Internal Revenue Code of 1997, § 33 (Special treatment of fringe benefits) [Rep. Act No. 8424]. Lawphil. ↩︎
- Bureau of Internal Revenue. (2025, January 30). Revenue Regulations No. 4-2025: Further amending the “De Minimis” benefits provisions of RR No. 2-98, as amended ↩︎
