The Bureau of Internal Revenue (BIR) has issued Revenue Regulations (RR) No. 29-2025, further amending the rules on de minimis benefits.
This update increases the ceilings for certain non-taxable employee benefits, giving employers more flexibility to provide allowances and perks without triggering income tax or fringe benefit tax, when properly structured.
Below is a practical breakdown of what changed and what employers should take note of.
What Are De Minimis Benefits?
De minimis benefits are facilities or privileges of relatively small value given by employers to employees.
When these benefits fall within the limits set by the BIR, they are:
- Exempt from income tax on the part of the employee, and
- Not subject to fringe benefit tax on the part of the employer.
These benefits are commonly used as part of employee compensation packages and HR programs.
Updated De Minimis Benefit Ceilings Under RR No. 29-2025
RR No. 29-2025 increases or clarifies the allowable tax-exempt amounts for several common benefits, including:
- Unused vacation leave credits (private employees)
– Up to 12 days per year, when monetized - Medical cash allowance to dependents
– Up to ₱2,000 per semester or ₱333 per month - Rice subsidy
– Up to ₱2,500 per month (cash or in kind) - Uniform and clothing allowance
– Up to ₱8,000 per year - Actual medical assistance
– Up to ₱12,000 per year
(e.g., medical allowance, executive check-ups, maternity assistance, routine consultations) - Laundry allowance
– Up to ₱400 per month - Employee achievement awards
– Up to ₱12,000 per year, provided these are given under a written plan and do not favor highly paid employees - Christmas and major anniversary gifts
– Up to ₱6,000 per year - Daily meal allowance for overtime or night shift
– Up to 30% of the regional minimum wage - CBA and productivity incentive benefits
– Combined annual value not exceeding ₱12,000 per employee
Once these thresholds are exceeded, the excess amount becomes taxable compensation.
Why This Matters for Employers
RR No. 29-2025 is not just an HR update, it is a tax planning opportunity.
Properly maximizing de minimis benefits allows employers to:
- Increase employee take-home value without increasing tax exposure
- Structure compensation packages more efficiently
- Avoid unnecessary income tax and withholding issues during BIR audits
However, misclassification or exceeding the allowed ceilings can result in:
- Deficiency withholding taxes
- Penalties and interest
- Reclassification of benefits as taxable compensation
Important Compliance Reminders
To stay compliant:
- Ensure benefits are within the prescribed limits
- Properly document allowances and awards
- Align payroll, HR policies, and accounting records
- Regularly review compensation structures against current BIR regulations
De minimis benefits must be correctly implemented, not just labeled as such.
How We Can Help
At Bong Corpuz & Co. CPAs, we assist businesses in:
- Reviewing compensation and allowance structures
- Identifying tax-efficient employee benefits
- Ensuring payroll and withholding tax compliance
- Preparing for BIR audits and assessments
If you want to make sure your employee benefits are both competitive and tax-compliant, our team is here to help.
Source: Bureau of Internal Revenue, Revenue Regulations No. 29-2025
Bong Corpuz & Co. CPAs 