Quick Answer
A 13th-month pay is an extra month's salary paid annually, typically in December. While common in some countries, it's rare in the U.S. where only 3% of employers offer it. Most U.S. companies provide holiday bonuses instead, averaging $1,797 per employee according to the Society for Human Resource Management.
Best Answer
Marcus Rivera, Compensation & Benefits Analyst
Best for employees evaluating compensation packages or working for international companies
What is 13th-month pay and how does it work?
A 13th-month pay is exactly what it sounds like: an additional month's salary paid once per year, typically in December before the holidays. If you earn $60,000 annually ($5,000 per month), your 13th-month pay would be another $5,000 payment.
This practice originated in countries like the Philippines, Italy, and parts of Latin America where it's legally mandated. Employers must pay workers the equivalent of one month's salary as a bonus, separate from their regular 12 monthly paychecks.
How common is 13th-month pay in the United States?
In the U.S., 13th-month pay is extremely rare. According to the Society for Human Resource Management (SHRM), only about 3% of U.S. employers offer a structured 13th-month payment. Instead, American companies typically provide:
Example: 13th-month pay vs. U.S. holiday bonus
Let's compare two $60,000 salary scenarios:
With 13th-month pay (rare in U.S.):
Typical U.S. holiday bonus:
Tax implications of 13th-month pay
When you receive a 13th-month payment in the U.S., it's treated as supplemental income by the IRS. According to IRS Publication 15, supplemental wages are subject to:
Using our $5,000 example, you'd see approximately $1,483 withheld, leaving you with $3,517 net.
Key factors that affect 13th-month pay
What you should do
If you're evaluating a job offer that mentions 13th-month pay, ask specific questions:
Use our [job-offer-compare](#) tool to calculate the total annual value including any 13th-month payments or bonuses.
Key takeaway: True 13th-month pay is rare in the U.S. (only 3% of employers), but the concept helps you understand total compensation when comparing job offers, especially with international companies.
*Sources: Society for Human Resource Management 2023 Employee Benefits Survey, [IRS Publication 15](https://www.irs.gov/pub/irs-pdf/p15.pdf)*
Key Takeaway: 13th-month pay is an extra month's salary paid annually, but only 3% of U.S. employers offer it. Most provide holiday bonuses averaging $1,797 instead.
Comparison of 13th-month pay vs. typical U.S. bonus structures
| Compensation Type | Amount (on $60K salary) | Timing | Guarantee Level | U.S. Prevalence |
|---|---|---|---|---|
| 13th-month pay | $5,000 (8.3% of salary) | December | Usually guaranteed | 3% of employers |
| Holiday bonus | $1,500-$2,500 (2.5-4%) | November-December | Discretionary | 42% of employers |
| Performance bonus | $1,800-$6,000 (3-10%) | Year-end/quarterly | Performance-based | 35% of employers |
| Profit sharing | $600-$3,000 (1-5%) | Annual | Company performance | 28% of employers |
More Perspectives
Marcus Rivera, Compensation & Benefits Analyst
Best for new graduates or workers encountering this term for the first time
13th-month pay explained simply
Think of 13th-month pay as getting an extra paycheck once a year. If your monthly salary is $4,000, you'd receive an additional $4,000 payment, usually in December.
This is different from a typical bonus because:
Why you probably won't see this at U.S. companies
Most American employers don't offer 13th-month pay. Instead, you might see:
What this means for your first job search
When comparing job offers, don't expect 13th-month pay unless you're applying to:
Focus instead on the total compensation package: base salary, health benefits, 401(k) matching, and any performance bonuses.
Key takeaway: As a new worker, you'll rarely encounter true 13th-month pay in the U.S. Focus on base salary and traditional benefits when evaluating your first job offers.
Key Takeaway: 13th-month pay is uncommon in the U.S. New workers should focus on base salary and standard benefits rather than expecting this extra payment.
Sources
- Society for Human Resource Management 2023 Employee Benefits Survey — Annual survey of employer benefit practices
- IRS Publication 15 — Employer's Tax Guide - supplemental wage withholding rules
Related Questions
Reviewed by Marcus Rivera, Compensation & Benefits Analyst on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.