THR tax is a frequently discussed topic ahead of Eid al-Fitr because many employees are surprised to see that the amount of Eid allowance they receive is not as large as they had imagined.
This usually occurs because there are tax deductions that must be fulfilled according to tax regulations in Indonesia.
This is because even though THR is additional income given by companies to employees before religious holidays, in the Indonesian tax system, additional income like this is included in the object of Income Tax (PPh) Article 21.
To avoid confusion when you see the THR amount deposited into your account, it’s important to understand how the 2026 THR tax is calculated and what factors influence the amount of the deduction.
Why is THR subject to THR tax?
Some people believe that THR is a pure bonus that should be received without deductions. However, according to Directorate General of Taxes (DGT) regulations, any additional economic capacity received by a taxpayer is taxable.
Therefore, THR is treated as part of employee income that must be calculated in Article 21 Income Tax. This makes the company have an obligation to:
- Withholding taxes from employee income.
- Pay taxes to the state.
- Report the deductions to the tax administration.
If a company does not make tax deductions according to the rules, the company may be subject to administrative sanctions.
Average Effective Rate (TER) System
In recent years, the government has used the Average Effective Rate (TER) method to simplify the calculation of employee income tax each month.
Through this system, companies no longer have to manually calculate taxes using complicated formulas. Tax rates are determined as a percentage based on the total gross income received in a month.
Through this system, companies no longer have to manually calculate taxes using complicated formulas. Tax rates are determined as a percentage based on the total gross income received in a month.
This increase in income often results in higher TER rates than in normal months. This is why tax deductions during THR months are noticeably larger.
Non-Taxable Income Limit (PTKP)
Not all employees are subject to THR tax. The government sets a specific income threshold known as Non-Taxable Income (PTKP).
If your total income for a year is below the PTKP limit, you don’t have to pay income tax. The following are the PTKP limits based on family status.
- TK/0 (Not Married): Rp. 54,000,000 per year
- K/0 (Married without children): IDR 58,500,000 per year
- K/1 (Married with one child): IDR 63,000,000 per year
- K/2 (Married with two children): IDR 67,500,000 per year
- K/3 (Married with three children): IDR 72,000,000 per year
The more family dependents you have, the greater the tax-free income limit.
Why Do Tax Deductions During THR Feel Bigger?
Many employees complain that the tax deductions during THR (holiday bonus) seem larger. This is actually due to the drastic increase in total monthly income.
For example, during a normal month, you only receive a monthly salary. However, around Eid al-Fitr, your monthly income consists of your monthly salary and a holiday bonus (THR) equivalent to your salary.
This combination causes the total income for the month to increase sharply so that the applicable tax rate also increases.
In fact, the amount of tax you owe remains the same annually. The larger deduction during the THR month is simply part of the tax calculation mechanism.
Example of How to Calculate 2026 THR Tax
To make it easier to understand, here is a simple example of calculating THR Tax 2026.
Let’s say you have income with the following data:
- Monthly salary: Rp8,000,000
- THR: Rp. 8,000,000
- Status: Married with one child (K/1)
So the way to calculate THR after tax is:
1. Calculating Annual Income
Annual salary:
8,000,000 × 12 = IDR 96,000,000
Total annual income:
96,000,000 + 8,000,000 = Rp. 104,000,000
2. Calculating PTKP
K/1 Status:
63,000,000 per year
3. Calculating Taxable Income (PKP)
PKP:
104,000,000 – 63,000,000 = IDR 41,000,000
4. Calculating Annual Tax
The first layer tax rate is 5%. So, the annual tax:
41,000,000 × 5% = IDR 2,050,000
5. Calculating Tax Without THR
If only salary:
96,000,000 – 63,000,000 = Rp. 33,000,000
However, after tax:
33,000,000 × 5% = IDR 1,650,000
6. Calculating THR Tax
Additional tax from THR:
2,050,000 – 1,650,000 = IDR 400,000
7. Net THR
The net THR that you will receive after being reduced by tax is:
8,000,000 – 400,000 = Rp. 7,600,000
This example shows that THR tax is actually an addition to the annual tax calculation, not a stand-alone tax.
Factors That Make THR Tax Different
Each employee may have a different THR tax amount. This is influenced by several factors:
- Salary Amount. The higher your salary, the higher the chance of falling into a higher tax bracket.
- PTKP status. Marital status and number of dependents will affect the tax-free income limit.
- Tax rate layers. Indonesia uses a progressive tax system, meaning the higher the income, the higher the tax percentage.
Fixed Tax Calculation Adjusted at the End of the Year
Although the 2026 THR Tax cut seems large in certain months, there are actually no additional new taxes that have appeared.
At the end of the year, your entire income for the year will be recalculated using the progressive rate in accordance with Article 17 of the Income Tax Law in conjunction with the HPP Law.
Monthly tax deductions, including THR (Holiday Allowance), will be credited to the annual tax return. Any discrepancies will be adjusted when filing the SPT.
In other words, tax deductions during THR are only part of the annual tax calculation mechanism.
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