How To Compute Salary in the Philippines: Net Pay, Deductions, and Overtime

Step 1: Compute gross monthly salary

Start with base salary and add taxable income components like overtime and allowances.

1
List your fixed monthly base
Use the amount in your contract or payroll summary as your baseline gross pay.
2
Add variable earnings
Include overtime pay, night differential, and performance bonuses earned within the period.
3
Separate non-taxable items
Track reimbursements and non-taxable allowances so they do not inflate taxable income.

Example

Example: Base pay 30,000 + overtime 2,500 + taxable allowance 1,000 = 33,500 gross taxable income.

Apply SSS, PhilHealth, and Pag-IBIG before income tax to get taxable compensation.

1
Compute contribution deductions
Use current government contribution tables and your compensation bracket.
2
Get taxable compensation
Gross taxable income minus mandatory contributions equals taxable compensation.
3
Apply withholding tax
Use the BIR withholding schedule that matches your payroll frequency.

Example

Example: 33,500 gross - 2,650 contributions - 1,925 withholding tax = 28,925 estimated net pay.

Cross-check your computation with your payslip to spot missing overtime or deduction errors.

1
Compare every line item
Ensure each addition and deduction appears with the same amount and payroll date.
2
Check adjustment entries
Look for retroactive pay or correction entries that may affect your final net amount.
3
Track monthly trend
Save each computation so you can project quarterly savings and tax impact.