Standard deductions are mandatory and fixed amount or a percentage of the basic salary held by any authority as a form of necessary dues. Standard Deductions A. SSS Contribution All employees of private companies and enterprises in the Philippines are covered by the Social Security System (SSS). It is a government agency founded in 1957 which provides retirement and health benefits. Members can also avail salary and calamity loans. The monthly contributions are based on the monthly salary bracket of each member. The current SSS contribution rate effective April 2019 is 12% of the monthly salary and this is being shared by the employer (8%) and the employee (4%). SSS Contribution Table Monthly Salary P2,000 and below P2,001 P19,999.99 Employee's Share P80 4% P800 Example: P20,000 and above Freya, a cashier in a supermarket, received a monthly salary of $15,000. How much will be her SSS contribution? Solution: SSS Contribution = Monthly Salary x 0.04 = P15,000 x 0.04 = 600 B. PhilHealth Contribution All employees (private and government), are to be members of PhilHealth. This agency helps the members and their beneficiaries in times of sickness. PhilHealth monthly premium is shared equally shared by the employer and employee. The PhilHealth contribution table is shown on the other page. PhilHealth Contribution Table Year Monthly Basic Salary Employee's Share P10,000 and below P150 2020 P10,000.01 - P59,999.99 1.5% P60,000 and above P900 P10,000 and below P175 2021 P10,000.01 - P69,999.99 1.75% P70,000 and above P1,225 Example 1: Michael, a regular employee in a private company, has a monthly basic salary of $25,000. Solve for his mandatory deductions. a. SSS Contribution Solution: Since his monthly salary is beyond the maximum of $20,000, then her monthly SSS contribution is #800. b. PhilHealth Contribution Solution: PhilHealth Contribution = monthly basic salary x rate c. Pag-Ibig Contribution Solution: = P25,000 x 0.015 = P375 Since his monthly salary is beyond the maximum of 5,000, then her monthly Pag-Ibig contribution is 100. d. Income Tax = Annual Gross Income gross monthly income x 12 = P25,000 x 12 = P300,000 Total Annual Contributions = (SSS + PhilHealth + Pag-Ibig) x 12 = (P800 +375 + 100) x 12 = P1,275 x 12 = P15,300 Annual taxable Income = Annual Gross Income - Total Annual Contributions = 300,000-P15,300 = P284,700 Annual Taxable Income Tax Rate over P250,000 up to P400,000 20% of excess over P250,000 Monthly Income Tax = Tax Base + [(Annual taxable Income - Min.) x Ratel = 12 = PO + [(P284,700 - $250,000) x 0.20] = $6,940 12 P578.33 12 Example: On June 2020, Harley received a monthly basic salary of $25,000.00. How much will be her PhilHealth contribution? Solution: PhilHealth Contribution = monthly basic salary x rate C. GSIS Contribution = $25,000.00 x 0.015 = P375.00 All government employees (permanent and non-permanent) are members of the Government Service Insurance System (GSIS). It is government-owned and controlled social insurance institution that provides defined benefit schemes for its members under the law. The GSIS contribution is shown below. GSIS Contribution Table Monthly Basic Salary No min/max Employee's Share 9% Example: Mr. Garcia, a public school teacher receives a monthly basic salary of $27,000.00. How much will be his GSIS contribution? Solution: GSIS Contribution = monthly basic salary x rate = $27,000.00 x 0.09 = $2,430.00 D. Pag-Ibig Contribution The Home Development Mutual Fund (HDMF), more popularly known as the Pag- Ibig Fund is a government-owned and controlled corporation established to provide national savings program, short-term loans, and affordable shelter financing for the Filipino workers. The Pag-Ibig contribution table is shown below. Pag-Ibig Contribution Table Monthly Basic Salary P1,500 and below Employee's Share 1% P1,500 P4,999 2% P100 Example: P5,000 and above Ms. Alberto receives a monthly basic salary of $18,000.00. How much will be her Pag-Ibig contribution? Solution: Since the employee receives a salary more than the maximum of $5,000, therefore, her monthly Pag-Ibig Contribution is 100. E. Income Tax Income is taxed progressively up to 32%. The following rates apply to individuals on all their net income derived from business or from the practice of their profession. Income Tax Table Annual Taxable Income #250,000 and below over 250,000 up to P400,000 over P400,000 up to 800,000 over P800,000 up to P2,000,000 over P2,000,000up to P8,000,000 above P8,000,000 Annual Income Tax None (0%) 20% of excess over P250,000 #30,000 + 25% of excess over $400,000 P130,000 + 30% of excess over $800,000 $490,000 + 32% of excess over 2,000,000 #2.41 million + 35% of excess over 8 million ACTIVITY 1.2 siqua Complete the given table by solving for the mandatory deductions of each employee. Round off your answers to the nearest centavo. Write your answers on a separate sheet of paper or notebook. Don't forget to show your solutions. Monthly Basic SSS Salary P15,000 P20,000 P30,000 P35,000 P50,000 GSIS Income PhilHealth Pag-ibig Tax Net Earnings