Why Your Take-Home Pay Seems Lower Than Expected

Nov 25, 2025

Why Your Take-Home Pay Seems Lower Than Expected

1. Understanding Take-Home Pay
Take-Home Pay = Gross Salary – (Taxes + Mandatory Contributions + Voluntary Deductions)
2. Common Reasons Take-Home Pay Is Lower
A. Mandatory Government Contributions
B. Withholding Tax
C. Voluntary Deductions
D. Payroll Errors
3. Example of a Typical Take-Home Pay
DeductionAmount (₱)
SSS875
PhilHealth562.50
Pag-IBIG500
Withholding Tax1,330
Voluntary Deductions500
Total Deductions3,767.50
Take-Home Pay21,232.50
4. Tips to Understand and Improve Your Take-Home Pay

Many employees in the Philippines notice that their take-home pay is less than what they anticipated from their gross salary. Understanding the reasons behind these differences is crucial for budgeting, financial planning, and verifying payroll accuracy.

This guide explains why your take-home pay may appear lower than expected and what you can do about it.

Take-home pay, or net salary, is the amount you actually receive after mandatory and voluntary deductions:

If you only look at your gross salary, it’s easy to assume you’ll receive the full amount. However, several deductions reduce the actual amount you receive.

  1. SSS Contribution

    • Social security coverage for retirement, disability, sickness, maternity, and loans

  2. PhilHealth Contribution

    • Health insurance covering hospitalizations, surgeries, and maternity

  3. Pag-IBIG Contribution

    • Housing loans, savings, and short-term loans

These are non-negotiable deductions, automatically withheld from your payroll.

  • Computed based on TRAIN Law 2025 rates

  • Progressive taxation means higher-income employees pay a higher percentage

  • Includes allowances and other taxable benefits

Example: A monthly gross salary of ₱25,000 may incur withholding tax of ₱1,330.

  • Optional deductions like:

    • Private insurance

    • Union dues

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

  • These reduce take-home pay but often offer long-term benefits or savings

  • Miscalculations by HR or payroll software

  • Delays in remitting contributions

  • Missing allowances or incorrect taxable income calculations

Always review your payslip for discrepancies.

Suppose your monthly gross salary = ₱25,000:

Even though the gross salary is ₱25,000, the take-home pay is only ₱21,232.50, due to these deductions.

  1. Review your payslip every month to check deductions

  2. Confirm mandatory contributions match SSS, PhilHealth, and Pag-IBIG records

  3. Track voluntary deductions to avoid overpayment

  4. Maximize non-taxable allowances like rice, transportation, or medical allowances

  5. Communicate with HR if deductions seem incorrect

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