Your First Payslip, Decoded
Understand every line of your payslip — where your money goes and why those deductions actually protect you.
Why your payslip matters
Your payslip is a map of your money. Every peso deducted has a purpose — from funding your future retirement pension to covering hospitalization costs. Most fresh graduates glance at the net pay and ignore the rest. That's a mistake. Understanding your payslip is the first step to taking control of your finances.
Gross pay vs. net pay
Gross pay is your salary before deductions. Net pay (take-home pay) is what actually lands in your bank account. The difference? Mandatory government contributions and income tax. On a P25,000 gross salary, expect roughly P2,500–P3,000 in total deductions, leaving you with around P22,000–P22,500 net.
Tip
Use the Gov't Contributions calculator to see the exact breakdown for your salary — it computes your SSS, PhilHealth, Pag-IBIG deductions, and withholding tax automatically based on current 2024 rates.
SSS (Social Security System)
Your SSS contribution is split between you and your employer. The employee share is 5% of your Monthly Salary Credit (MSC). This funds your retirement pension, maternity/sickness benefits, disability coverage, and salary/calamity loans. The more you contribute over your career, the higher your pension will be.
- •Retirement pension after 120 months (10 years) of contributions
- •Salary loan up to 2 months' salary after 36 contributions
- •Maternity benefit: 100% of daily salary credit for 105 days
- •Sickness benefit: 90% of daily salary credit for up to 120 days
PhilHealth
PhilHealth is your national health insurance. The premium is 5% of your basic salary, split equally between you and your employer. It covers inpatient hospitalization, outpatient consultations, and selected medicines. A single hospital stay without PhilHealth can cost P50,000–P200,000+ out of pocket.
Philippine Law
PhilHealth contributions are mandatory for all employed Filipinos under Republic Act No. 11223 (Universal Health Care Act).
Pag-IBIG (HDMF)
Pag-IBIG contributions are P200/month for most employees. Your employer matches this amount. While it seems small, Pag-IBIG opens the door to housing loans (up to P6,000,000 at 5.75% interest) and the MP2 savings program that earns 6–7% tax-free annually.
Tip
After 24 months of Pag-IBIG contributions, you're eligible for housing loans. Start tracking your contributions now so you know exactly when you qualify.
Withholding tax
Under the TRAIN Law, you pay 0% income tax if your annual taxable income is P250,000 or below (roughly P20,833/month). Above that threshold, tax rates range from 15% to 35% on a graduated scale. Your employer withholds this tax from each paycheck and remits it to the BIR on your behalf.
What to do right now
Don't just look at your payslip — verify it. Check that your SSS, PhilHealth, and Pag-IBIG deductions match the official contribution tables. Some employers make errors or, worse, deduct but fail to remit. Track your contributions monthly using Sandalan.
- •Open the Gov't Contributions calculator and enter your gross salary
- •Compare the calculated deductions with your actual payslip
- •Start logging your contributions in the Contributions Tracker
- •Set a monthly reminder to verify your contributions are posted
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