Balmori Software Inc.

[ Article ]

Photo: Steve Buissinne

Posted 2026 January 12

There is a category of items in workers' payslips that the Bureau of Internal Revenue (BIR) labeled years ago (in 1998) as "de minimis" items. These were things like uniform allowances, rice allowances, encashment of unused vacation leaves, and the like, as opposed to major pay items like salaries, wages, and bonuses.

Just as 2025 was ending, the BIR released Revenue Regulation 029-2025.

The BIR website treats the RR's date of issue as 22 Dec 2025. Therefore, following the usual government practice, the new regulation takes effect 15 days after 22 December 2025, or January 6th of the new year.*

*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.

Main takeaways

To get to the meat of the matter, here are the main takeaways from RR 029-2025:

In a nutshell, RR 029-2025 (a) specifies the categories of de minimis items, and defines peso caps on them, and (b) increases the caps on some existing de minimis categories (e.g., the De Minimis encashable Vacation Leaves for private employees has been increased from 10 days to 12 days).

For government employees, (i) limits are removed for unused vacation leave (VL) encashment, and (ii) encashment of unused sick leave (SL) for the first time becomes part of de minimis items, thus tax-exempt; furthermore, it is not subject to any limits. (In contrast, private sector employees' SL encashments have always been taxable and not a De Minimis item, and with this latest RR will continue to be.)

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 new 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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