Expanded Maternity Leave Benefits Are Now Tax-Free

These benefits are exempted from income and withholding taxes.
PHOTO: istockphoto

Great news for expectant moms—the expanded maternity leave benefits were declared tax-free by the Bureau of Internal Revenue (BIR). In a memo posted last month, the BIR ruled that the salary differential under the Expanded Maternity Leave Law is a benefit, so it should be exempted from income and withholding taxes.

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“The salary differential represents the difference between the SSS [Social Security System] benefits and the employee’s basic pay; an amount to be shouldered by the employer,” according to Business World. 

However, certain employers are exempted from covering the salary differential. The law lists down these establishments:

  • Those operating distressed establishments
  • Those retail/service establishments and other enterprises employing not more than 10 workers
  • Those considered micro enterprises and engaged in the production, processing, or manufacturing of products or commodities including agro-processing, trading, and services, whose total assets are not more than P3 million
  • Those who are already providing similar or more than the benefits herein provided
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Under the Expanded Maternity Leave Law, female employees have 105 days of maternity leave with pay and an option to extend up to 30 days without pay, according to Business World. Single moms are entitled to 15 additional days of leave. Dads have seven days of unpaid leave, according to Philstar

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