De Minimis Benefits
Updated June 13, 2026
On this page
Definition
De minimis benefits are facilities and privileges of relatively small value that employers give to employees. Only the items on the closed list in the regulations qualify, each up to its own ceiling, and within those ceilings they are not subject to income tax, withholding tax on compensation or fringe benefit tax, for both rank-and-file and managerial employees.
The list of de minimis benefits is set by regulation under RR 2-98 Section 2.78.1(A)(3), most recently amended by RR 29-2025. The current ceilings include: monetized unused vacation leave of private employees up to 12 days a year; medical cash allowance to dependents up to ₱2,000 a semester (₱333 a month); rice subsidy up to ₱2,500 a month; uniform and clothing allowance up to ₱8,000 a year; actual medical assistance up to ₱12,000 a year; laundry allowance up to ₱400 a month; employee achievement awards up to ₱12,000 a year; Christmas and major anniversary gifts up to ₱6,000 a year; daily meal allowance for overtime and night or graveyard shifts up to 30% of the regional basic minimum wage; and CBA and productivity incentive benefits up to ₱12,000 a year combined. There is no single ₱90,000 de minimis cap. Each item has its own ceiling, and an amount above a ceiling is not de minimis. The separate ₱90,000 ceiling in NIRC §32(B)(7)(e) covers 13th month pay and other benefits such as Christmas bonuses and productivity incentives.
Detailed explanation
Overview
De minimis benefits are facilities and privileges of relatively small value given by employers to employees. They are listed in RR 2-98 Section 2.78.1(A)(3), as amended, most recently by RR 29-2025. Within their ceilings they are not subject to income tax or withholding tax on compensation, and they are excluded from the fringe benefit tax for managerial and supervisory employees (NIRC §33(C)(4)).
Legal Framework
NIRC §33(C)(4) leaves the definition of de minimis benefits to regulations issued by the Secretary of Finance. The list is closed: a benefit not on it is not de minimis, whatever its size. Each item has its own ceiling, and there is no overall de minimis cap.
Qualifying Items and Ceilings (RR 29-2025)
The current list covers: monetized unused vacation leave credits of private employees up to 12 days a year; monetized vacation and sick leave credits of government employees; medical cash allowance to dependents up to ₱2,000 a semester or ₱333 a month; rice subsidy up to ₱2,500 a month; uniform and clothing allowance up to ₱8,000 a year; actual medical assistance up to ₱12,000 a year; laundry allowance up to ₱400 a month; employee achievement awards up to ₱12,000 a year; Christmas and major anniversary gifts up to ₱6,000 a year; daily meal allowance for overtime and night or graveyard shifts up to 30% of the regional basic minimum wage; and CBA and productivity incentive benefits up to ₱12,000 a year combined.
Who Can Receive Them
De minimis benefits are exempt for both rank-and-file and managerial employees. The regulation does not require that every employee receive them, but employee achievement awards must be given under an established written plan that does not favor highly paid employees.
Employer Deductibility
Employers may deduct the cost of de minimis benefits as an ordinary and necessary business expense under NIRC §34(A), supported by payroll records and vouchers.
Common Pitfalls
The most common errors are treating benefits that are not on the list, such as a general transportation allowance, as de minimis, and paying above a ceiling without withholding on the excess. The amount above a ceiling is not de minimis and is treated as compensation.
Interaction with Other Benefits
De minimis benefits are separate from the ₱90,000 exclusion for 13th month pay and other benefits such as Christmas bonuses and productivity incentives (NIRC §32(B)(7)(e)). A cash year-end bonus falls under the ₱90,000 exclusion, not under the de minimis list. Separation pay received because of death, sickness or other causes beyond the employee's control is excluded under a different rule (NIRC §32(B)(6)(b)).
Why it matters
Employees receive de minimis benefits free of income tax, which raises take-home pay. For employers they are a deductible business expense and, for managerial and supervisory staff, they are outside the 35% fringe benefit tax (NIRC §33(C)(4)). Knowing each ceiling prevents under-withholding: anything above a ceiling is taxable.
How it works
Employer Determines Eligible Benefits
The employer picks benefits from the closed list in RR 2-98 Section 2.78.1(A)(3), as amended by RR 29-2025, such as the rice subsidy, uniform allowance, laundry allowance or medical assistance, and sets amounts within each ceiling. Benefits not on the list, such as a general transportation allowance, are not de minimis.
Track Annual Value Per Employee
The employer keeps records of each benefit given to each employee and compares it with that item's ceiling, monthly, per semester or yearly as the regulation states. The amount above a ceiling is not de minimis and is treated as part of the employee's compensation.
Employee Receives Tax-Free Benefit
De minimis amounts within their ceilings are not subject to income tax or withholding tax on compensation. They are shown as non-taxable in the employer's alphalist and in the employee's Form 2316.
Employer Deducts Cost as Business Expense
The employer deducts the cost of de minimis benefits as an ordinary and necessary business expense, supported by payroll and other records (NIRC §34(A)).
Examples
Manufacturing company rice subsidy for all staff
ABC Manufacturing gives each of its 200 employees a ₱2,500 monthly rice subsidy. That is ₱30,000 per employee a year, within the ₱2,500 monthly ceiling under RR 29-2025, so it is not taxable to the employees. The company deducts the ₱6,000,000 total as a business expense.
BPO company exceeding de minimis threshold
XYZ BPO gives Maria Santos a ₱3,000 monthly rice subsidy, a ₱400 monthly laundry allowance and an ₱8,000 Christmas gift. The rice subsidy is ₱500 a month above the ₱2,500 ceiling (₱6,000 for the year) and the gift is ₱2,000 above the ₱6,000 ceiling. Those excesses, ₱8,000 in total, are not de minimis and are treated as part of her compensation. The laundry allowance is within the ₱400 ceiling.
Benefit not on the de minimis list
DEF Corp pays a ₱5,000 yearly gym membership for its managers. A gym membership is not on the de minimis list. For managers it is a fringe benefit, so the employer pays fringe benefit tax of ₱5,000 ÷ 65% × 35% = ₱2,692.31 (NIRC §33).
Solo proprietor with one employee
Juan dela Cruz, a sole proprietor, gives his assistant Rosa an ₱8,000 uniform allowance for the year and a ₱400 monthly laundry allowance (₱4,800 a year). Both are within their ceilings, so the ₱12,800 is not taxable to Rosa, and Juan deducts it as a business expense.
Christmas gift and cash bonus
GHI Services gives every employee a ₱6,000 Christmas gift and a ₱30,000 cash bonus. The gift is within the ₱6,000 de minimis ceiling. The cash bonus is not a de minimis benefit; it falls under the separate ₱90,000 exclusion for 13th month pay and other benefits (NIRC §32(B)(7)(e)), so it is tax-free only to the extent that ceiling is not used up.
Common misconceptions
- Myth: De minimis benefits are completely unlimited as long as they are small in value.
- Fact: Only the items on the closed list in the regulations qualify, and each has its own ceiling under RR 29-2025, such as ₱2,500 a month for the rice subsidy and ₱400 a month for the laundry allowance.
- Myth: De minimis benefits are capped at ₱90,000 a year per employee.
- Fact: There is no ₱90,000 de minimis cap. The ₱90,000 ceiling covers 13th month pay and other benefits (NIRC §32(B)(7)(e)); de minimis items are measured against their own ceilings.
- Myth: A cash Christmas bonus is a de minimis benefit.
- Fact: Christmas gifts up to ₱6,000 a year are de minimis, but a cash bonus is not on the list. It falls under the ₱90,000 exclusion for 13th month pay and other benefits instead.
- Myth: Any allowance an employer calls de minimis is tax-free.
- Fact: Allowances that are not on the list, such as a regular transportation allowance, are not de minimis. They are part of compensation for rank-and-file employees, and fringe benefits for managerial and supervisory employees.
- Myth: De minimis benefits need no employer records.
- Fact: Employers should keep records showing what was given to each employee and when, so each item can be checked against its ceiling during an audit.
Questions people ask
Is there an overall annual de minimis cap per employee?
No. Each de minimis item has its own ceiling under RR 29-2025, such as ₱2,500 a month for the rice subsidy and ₱8,000 a year for the uniform allowance. The ₱90,000 ceiling is a different rule that covers 13th month pay and other benefits (NIRC §32(B)(7)(e)).
Do de minimis benefits count toward an employee's gross income for purposes of computing income tax?
No. De minimis benefits within their ceilings are not subject to income tax or to withholding tax on compensation (RR 2-98 Section 2.78.1(A)(3)). They are shown as non-taxable in the alphalist and Form 2316.
Can an employer deduct de minimis benefits as a business expense?
Yes. The employer may deduct the cost of de minimis benefits as an ordinary and necessary business expense, supported by records (NIRC §34(A)).
Does a cash year-end bonus count as a de minimis benefit?
No. A cash bonus is not on the de minimis list. It falls under the ₱90,000 exclusion for 13th month pay and other benefits (NIRC §32(B)(7)(e)). Amounts above ₱90,000 are taxable compensation.
What happens if a benefit exceeds its de minimis ceiling?
Only the amount up to the ceiling is de minimis. The excess is treated as part of the employee's compensation, and the employer should apply withholding to it. Tracking each item against its own ceiling prevents under-withholding.
Are de minimis benefits subject to withholding tax?
No. Amounts within the ceilings are not subject to withholding tax on compensation. The amount above a ceiling is not de minimis and is treated as compensation subject to the usual rules.
Can a self-employed person or sole proprietor claim de minimis benefits for themselves?
No. De minimis benefits are benefits given by an employer to its employees. A self-employed person or sole proprietor cannot give them to himself, but may give them to his employees and deduct the cost as a business expense (NIRC §34(A)).
In practice
- Employers keep a register of de minimis benefits per employee and check each item against its own ceiling, monthly, per semester or yearly as the regulation states.
- HR departments publish a benefits policy stating which de minimis items are given and in what amounts, set within the RR 29-2025 ceilings.
- During BIR audits, companies produce payroll records and benefit vouchers to show that the amounts treated as non-taxable were within the ceilings.
- Yearly ceilings, such as the ₱8,000 uniform allowance and the ₱6,000 Christmas gift ceiling, apply per calendar year.
- When ceilings change, as they did under RR 29-2025, payroll settings must be updated so that amounts above the new ceilings are withheld on.
Next steps
Learn more
Employee Benefits Calculator
Withholding Tax Calculator
Gross Income Calculator
Bir Form 2316
Bir Form 1701
Bir Form 1702
Employee Benefits Taxation Guide
Payroll Tax Compliance Guide
Related content
Calculators
Tax types
Taxpayer guides
BIR forms
Guides
Glossary
Sources & References (3)
Primary sources and the laws, regulations, and official issuances this page relies on. Each citation links directly to the issuing authority’s document.
- Bureau of Internal Revenue. “BIR RR 2-98 §2.78.1(A) as amended by RR 11-2018: de minimis benefit ceilings.” bir.gov.ph. Bureau of Internal Revenue, RR 2-98 as amended (de minimis benefits). Accessed .
- LawPhil Project (Arellano Law Foundation). “NIRC §32(B)(6)(d) (exclusions from gross income): full text.” lawphil.net. NIRC of 1997 (RA 8424), Sec. 32(B)(6)(d). Accessed .