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The Bureau of Internal Revenue just released Revenue Regulation 029-2025, just as 2025 was ending. The new RR is dated 27 October 2025, but signed by Finance Secretary Ralph Recto on 18 November 2025, and received by the BIR's Records Management Division 22 December 2025. The BIR website treats the RR's date of issue as also 22 Dec 2025. Therefore, the new regulation takes effect 15 days after 22 December 2025, or January 6th of the new year.Main takeaways To get to the meat of the matter, here are the main takeaways from RR 029-2025: 1. In a nutshell, RR 029-2025 (a) imposes new restrictions on both (b) the nature and (c) the amounts of most tax-exempt de minimis payroll items. 2. Exceptions are two:
a. Vacation leave (VL) encashment limits for private sector workers are slightly increased. From 10days/year before this RR, 12days/year in encashed VL are now tax-exempt.
3. Prior to RR 029-2025, companies had more leeway defining de minimis items. Now they have more strictly defined categories; and each category has defined peso limits, which did not exist before.b. In a big gift to government employees, (i) VL encashment limits are removed entirely, and (ii) (an even bigger gift) Sick leave (SL) encashment for the first time becomes part of de minimis items, thus tax-exempt; and it is not subject to any limits. (In contrast, private sector workers' SL encashments have always been taxable, and with this latest RR will continue to be.) 4. In sum, the new RR increases tax collections from salaried workers; no surprise. Experts have stated that salaried workers constitute over 80% of taxpayers in this country, so limiting de minimis items makes for a significant increase in overall tax collection. Professionals and entrepreneurs constitute a mere 4% of taxpayers, say the same experts. Click here to see a copy of RR 029-2025 Implications for the SURE! PayMaster app To be compliant with the new parameters of RR 029-2025, Balmori Software will have to do significant modifications to SURE! PayMaster. We will need to develop and integrate new modules to handle and set up each of the listed de minimis items with their individual monthly, semestral and/or annual limits and tax algorithms. Annualization parameters and algorithms will also have to be modified or reprogrammed. Several tables in SURE! PayMaster's database will need modifications. New Reference Tables will have to be introduced too (e.g., the Regional Basic Minimum Wages which serve as reference for the Daily Meal Allowance limits).We at Balmori Software are working posthaste on updating our payroll app. We will inform all our esteemed clients when this new compliant PayMaster is available. Due to the extensive reprogramming required, this will be an upgrade, and will be versioned as SURE! PayMaster 7.10.9. (RR 029-2025 unfortunately can't be addressed by a mere tweak to a table.) A likely question from SURE! PayMaster users Longtime users of SURE! PayMaster may ask: Do we need to wait for the revised, 029-2025-compliant SURE! PayMaster before we can annualize our payroll? The answer is: No need to wait for the new version; you can annualize now. The new parameters imposed by RR 029-2025 take effect in January 2026; therefore they don't affect 2025 payroll, and they don’t need to delay your annualization of payroll year 2025. Click here to see a copy of RR 029-2025  ###
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