Understanding Your Take-Home Pay: Full Breakdown

Nov 25, 2025

Understanding Your Take-Home Pay: Full Breakdown

1. What Is Take-Home Pay?
Take-Home Pay = Gross Salary – (Taxes + Mandatory Contributions + Voluntary Deductions)
2. Components of Take-Home Pay
A. Gross Salary
B. Mandatory Deductions
C. Voluntary Deductions
3. How to Compute Take-Home Pay
Step 1: Determine Gross Salary
Step 2: Compute Mandatory Contributions
Step 3: Compute Withholding Tax
Step 4: Subtract Voluntary Deductions
Step 5: Net Pay
4. Example
DeductionAmount (₱)
SSS875
PhilHealth562.50
Pag-IBIG500
Withholding Tax1,330
Total Deductions3,267.50
Take-Home Pay21,732.50
5. Tips to Maximize Take-Home Pay
6. Benefits of Understanding Your Take-Home Pay

Many employees focus on their gross salary, but what truly matters is your take-home pay—the amount you receive after deductions. Understanding how your pay is computed helps with budgeting, financial planning, and ensuring accurate payroll deductions.

This guide provides a full breakdown of take-home pay in the Philippines for 2025.

Take-home pay, also called net pay, is the portion of your salary that is actually deposited into your bank account after all mandatory and voluntary deductions.

Formula:

  • Total earnings before any deductions

  • Includes:

    • Basic salary

    • Allowances (transportation, housing, meal)

    • Bonuses and commissions

  1. Income Tax (Withholding Tax)

    • Based on TRAIN Law 2025 tax brackets

    • Progressive rates apply depending on annual income

  2. SSS Contribution

    • Social security for retirement, disability, and loans

  3. PhilHealth Contribution

    • Health insurance coverage for hospitalization and maternity

  4. Pag-IBIG Contribution

    • Housing loans, savings, and short-term loans

  • Optional contributions like:

    • Additional SSS voluntary payments

    • Private health insurance

    • Union dues

    • Loan repayments (salary, Pag-IBIG, SSS)

Include base pay, allowances, and expected bonuses.

  • SSS, PhilHealth, Pag-IBIG contributions based on 2025 rates

  • Use the Philippine Tax Calculator or apply TRAIN Law brackets

  • Subtract tax from gross salary

  • Any additional contributions or loan repayments

  • The remaining amount is your take-home pay

Monthly gross salary: ₱25,000

Understanding these deductions helps employees budget accurately and avoid surprises.

  1. Review Payroll – Ensure deductions are accurate

  2. Claim Non-Taxable Allowances – Transportation, rice, or medical allowances may be non-taxable

  3. Use Online Calculators – Check your expected net pay each month

  4. Plan Voluntary Contributions – Avoid overcommitting to loans or savings that reduce cash flow

  5. Keep Records – Payslips, receipts, and contribution statements

  • Better budgeting and financial planning

  • Accurate verification of payroll deductions

  • Ability to plan for savings and investments

  • Confidence in negotiating salary or bonuses

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