The rise of de minimis benefit ceilings

STRATEGIC BENEFITS DESIGN: A PLANNING OPPORTUNITY

- CLARISSA MAE SY

At the start of every year, we write down resolutions — promises to change habits we know are no longer working. More often than not, those resolutions are postponed, recycled, and quietly carried over from one year to the next.

Philippine tax policy has not been immune to this pattern. Although the need to revisit the ceilings for de minimis benefits has long been apparent due to inflation pressures and the rising cost of living, these thresholds remained mostly unchanged for years.

With the issuance of Revenue Regulations (RR) No. 29-2025, the Bureau of Internal Revenue (BIR) has finally moved to update the nontaxable ceilings for these benefits effective Jan. 6, 2026. The regulation marks a modest but meaningful change — and a timely way to begin the year.

De minimis benefits are facilities and privileges of relatively small value furnished by the employers to employees to promote health, goodwill, contentment, or efficiency. These benefits are exempt from income and withholding taxes; provided, they fall within the prescribed ceilings.

RR 29-2025 raises the ceilings for these tax-exempt de minimis benefits, specifically:

Monetized unused vacation leave (private employees):

from 10 days to 12

Medical cash allowance to dependents:

from P1,500 per semester (P250 per month) to P2,000

Rice subsidy:

from P2,000 per month to P2,500 per month, or its equivalent in kind (one 50 kg. sack of rice)

Uniform and clothing allowance:

from P7,000 per annum to P8,000

Actual medical assistance:

from P10,000 per annum to P12,000 per annum

Laundry allowance:

from P300 per month to P400

Employee achievement awards:

from P10,000 per annum to P12,000

Gifts during Christmas and major anniversary celebrations:

from P5,000 per employee per annum to P6,000