GENERAL MATHEMATICS

LEARNING MATERIAL 2: COMPUTING SALARY DEDUCTIONS,

GROSS PAY AND NET PAY

Learning Target: Compute salary deductions, gross pay and net pay

Key Terms and Formulas

Gross income is the total earnings before any deductions are made. Includes base salary,
overtime, commission, and piecework pay.

Gross income = Salary + Allowances

Net Pay is also called "take-home pay." This is the amount left after deductions are subtracted
from gross pay.
Net Pay = Gross Income – Total Deductions

Deductions are the amounts subtracted from gross pay by law or agreement. In the Philippines,
common deductions include:

1. Social Security System (SSS)

Applicable to: Private sector employees
Purpose: Retirement, disability, maternity, sickness, and death benefits
Rate: Based on a schedule tied to the employee's monthly compensation; refer to
https://www.sss.gov.ph/wp-content/uploads/2024/12/2025-SSS-Contribution-Table-rev.pdf

2. Government Service Insurance System (GSIS)

Applicable to: Government employees only
Purpose: Life insurance, retirement, disability, and survivorship benefits
Rate: 9% of monthly basic salary (employee share) based on Board Resolution No. 88

3. Pag-IBIG Fund (HDMF)

Applicable to: All employees
Purpose: Housing loans, savings, and calamity loans
Rate: 2% of monthly basic salary (employee share, maximum of 200) based on Circular No. 460

4. PhilHealth
Applicable to: All employees
Purpose: Healthcare benefits and hospitalization coverage
Rate: 5% of monthly basic salary, shared between employee and employer
based on Advisory No. 2025 - 002

5. Withholding Tax (BIR)

Applicable to: All employees
Purpose: Income tax, collected in advance by the employer
Rate: Based on compensation bracket and applicable exemptions; for tax rate, refer to
https://www.bir.gov.ph/income-tax
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6. Other Deductions (Optional or Conditional)
These deductions depend on agreements between the employee and employer:
• Loans
• Cash Advances
• Insurance Premiums
• Union Dues
• Deductions for Absences or Tardiness

DETERMINING SSS CONTRIBUTIONS

Examples (for Business Employees):

1. Monthly salary: ₱8,650.00

Employee’s SSS Contribution: ₱425.00

2. Monthly Salary: ₱10,345.00

Problem 3.

Problem 4.

Problem 5.

Employee’s SSS Contribution: ₱525.00

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Practice Test 1. Determine the amount of SSS contribution of a business employee whose
monthly salary is given.

3. Monthly Salary: ₱14,925.00

Employee’s SSS Contribution: __________

4. Monthly Salary: ₱21,448.00

Employee’s SSS Contribution: __________

5. Monthly Salary: ₱32,245.00

Employee’s SSS Contribution: __________

COMPUTING GSIS CONTRIBUTIONS

Examples:

1. Monthly salary: ₱14,061.00

Employee GSIS Contribution: ₱14,061.00 x .09 = ₱1,265.49

2. Monthly salary: ₱17,866.00

Employee GSIS Contribution: ₱17,866.00 x .09 = ₱1,607.94

Practice Test 2. Determine the amount of GSIS contribution of a government employee whose
monthly salary is given.

3. Monthly salary: ₱20,110.00

Employee GSIS Contribution:

4. Monthly salary: ₱25,586.00

Employee GSIS Contribution:

5. Monthly salary: ₱34,421.00

Employee GSIS Contribution:

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COMPUTING Pag-IBIG Fund (HDMF) CONTRIBUTIONS
Examples:

1. Monthly salary: ₱14,061.00

Solution: ₱14,061.00 x .02 = ₱281.22
Maximum Contribution: ₱200.00
Employee Pag-IBIG Contribution: ₱200.00

2. Monthly salary: ₱17,866.00

Solution: ₱17,866.00 x .02 = ₱357.32
Maximum Contribution: ₱200.00
Employee Pag-IBIG Contribution: ₱200.00

Practice Test 3. Determine the amount of GSIS contribution of a government employee whose
monthly salary is given.

3. Monthly salary: ₱20,110.00

Solution:
Maximum Contribution:
Employee Pag-IBIG Contribution: __________

4. Monthly salary: ₱25,586.00

Solution:
Maximum Contribution:
Employee Pag-IBIG Contribution: __________

5. Monthly salary: ₱34,421.00

Solution:
Maximum Contribution:
Employee Pag-IBIG Contribution: __________

COMPUTING PhilHealth CONTRIBUTIONS

Examples:

1. Monthly salary: ₱14,061.00

Solution: (₱14,061.00 x .05)÷2 = ₱365.03
Employee PhilHealth Contribution: ₱365.03

2. Monthly salary: ₱17,866.00

Solution: (₱17,866.00 x .05)÷2 = ₱446.65
Employee Pag-IBIG Contribution: ₱446.65

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Practice Test 4. Determine the amount of PhilHealth contribution of an employee whose
monthly salary is given.

3. Monthly salary: ₱20,110.00

Solution:

Employee PhilHealth Contribution: __________

4. Monthly salary: ₱25,586.00

Solution:

Employee PhilHealth Contribution: __________

5. Monthly salary: ₱34,421.00

Solution:

Employee PhilHealth Contribution: __________

COMPUTING WITHHOLDING TAX

Examples (Employees with no other regular or supplementary income.):

1. Employee of a Private Company

Monthly salary: ₱14,061.00

Solution:
Deductions:
SSS Contribution: ₱700.00
PhilHealth Contribution: ₱365.03
Pag-IBIG Contribution: ₱200.00
Total Deductions: ₱1,265.03
Taxable Income: ₱14,061.00 - ₱1,265.03 = ₱12,795.97

Withholding Tax: 0.00 (Exempted)

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2. Government Employee
Monthly salary: ₱32,245.00

Solution:
Deductions:
GSIS Contribution: ₱2,902.05
PhilHealth Contribution: ₱806.13
Pag-IBIG Contribution: ₱200.00
Total Deductions: ₱3,908.18
Taxable Income: ₱32,245.00 - ₱3,908.18 = ₱28,336.82

Withholding Tax:
₱28,336.82 – ₱20,833.00 = ₱7,503.82
₱7,503.82 x .15 = ₱1,125.57

Withholding Tax: ₱1,125.57

Practice Test 5. Determine the amount of withholding tax of an employee whose

monthly salary is given. Assume that the employee has no other regular or
supplementary income.

3. Employee of a Private Company

Monthly salary: ₱20,110.00
Solution:

Withholding Tax:

4. Government Employee
Monthly salary: ₱37,024.00

Withholding Tax:

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5. Monthly salary: ₱56,390.00
Solution:

Withholding Tax:

COMPUTING GROSS AND NET PAY

Examples:
Problem 1. Anna works in a factory and earns ₱550 per day. She worked 22 days this month.
What is Anna’s gross income for the month? Considering her deductions for SSS,
PhilHealth, PAG-IBIG, and tax, compute her net income for the month.
Solution
Item Computation Amount
Gross Income ₱550.00 x 22 ₱12,100.00
SSS ₱600.00 (refer to SSS Table) ₱600.00
Philhealth (₱12,100.00 x 0.05) ÷2 ₱302.50
Pag-IBIG ₱12,100.00 x 0.02 ₱200.00
(maximum of ₱200)
Tax Withheld Exempted ₱0.00
Total Deductions ₱600.00 + ₱302.50 + ₱200.00 ₱1,102.50
Net Income ₱12,100.00 - ₱1,102.50 ₱10,997.50

Problem 2. James earns ₱75/hour. He worked 160 regular hours and 10 Over Time (OT) hours
(125% rate). What is James’s total gross income, including OT?

Solution
Item Computation Amount
Regular 160 hours x ₱75 ₱12,000.00

Overtime 10 hours x ₱75 x 1.25 ₱937.50

Gross Income ₱12,000.00 + ₱937.50 ₱12,937.50
SSS ₱650 (refer to SSS Table) ₱650.00
Philhealth (₱12,937.00 x 0.05) ÷2 ₱323.43
Pag-IBIG ₱12,937.00 x 0.02 ₱200.00
(maximum of ₱200)
Tax Withheld Exempted
Deductions ₱650.00 + ₱323.43 + ₱200.00 ₱1,173.43
Net Income ₱12,937.00 - ₱1,173.43 ₱11,763.57

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Problem 3. Ms. Rivera is a public-school teacher in the Philippines with a Salary Grade (SG) 22,
Step 1. She receives her monthly salary of ₱71,511.00 and non-taxable allowance of ₱2,000.00, but
she also has deductions including taxes, contributions, and a GSIS loan of ₱5,000 per month. Find
her net pay after all deductions?

Solutions:
Item Computation Amount
Regular Salary Given ₱71,511.00

Non-Taxable Allowance Given ₱2,000.00

Gross Pay ₱71,511.000 + ₱2,000.00 ₱73,511.00
GSIS ₱71,511.00 x .09 ₱6,435.99
Philhealth (₱71,511.00 x 0.05) ÷2 ₱1,787.78
Pag-IBIG ₱71,511.00 x 0.02 ₱200.00
(maximum of ₱200)
Taxable Income ₱73,511.00 – (₱2,000.00 + ₱6,435.99 + ₱63,087.23
₱1,787.78 + ₱200.00)
Tax Withheld ₱1,875.00 + [(₱63,087.23 – ₱33,333) x 0.20] ₱7,825.85
Loan Given ₱5,000.00
Deductions ₱6,435.99 + ₱1,787.78 + ₱200.00 + ₱21,249.62
₱7,825.85 + ₱5,000.00
Net Income ₱73,511.00 - ₱21,249.62 ₱52,261.38

Practice Test 6. Analyze and solve the given problems.

Problem 1. Mia is a factory worker earning ₱610 per day. She worked 20 days this month.
Compute Mia’s gross monthly income, estimate her SSS, PhilHealth, Pag-IBIG, and
withholding tax, and determine her net pay.

Problem 2. Jacob earns ₱75/hour, worked 40 regular hours and 10 overtime hours (OT rate is
125%). Compute Jacob’s gross income, apply government deductions using formulas,
and find net income.

Problem 3. Carla is a government employee with a monthly salary of ₱38,150.00 and non-taxable
allowance of ₱2000.00. She also pays a GSIS loan of ₱4,000.00/month. Compute all
deductions and net pay.

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