THR for Private-Sector Employees Remains Taxable, Here Are the Rules and How to Calculate PPh 21 Deductions

Jakarta – The Hari Raya Allowance (THR) remains one of the most anticipated additional incomes for workers ahead of religious celebrations. These funds are typically used for Lebaran preparations, homeward travel, and helping with family expenses.

However, behind the joy of receiving THR, some workers question the tax deductions applied to the allowance. As public attention to the size of THR tax deductions grows, some workers have even proposed exempting the allowance from Income Tax (PPh) Article 21.

Nevertheless, the government has stated that THR remains taxable under applicable tax regulations. Here is information on the rules and how to calculate it, compiled by Viva on Thursday, 5 March 2026.

THR Taxation Rules

The Minister of Manpower (Menaker) Yassierli confirmed that THR for 2026 will still be subject to Income Tax (PPh) Article 21. ‘In accordance with regulations,’ he said after a press conference at the Office of the Coordinating Ministry for Economic Affairs, Jakarta, on Tuesday.

This statement was made in response to demands by some workers for THR to be untaxed. Although the proposal emerged in public discussion, the government said it needs further study before becoming official policy. ‘We need to study it again,’ he said.

Regulation-wise, THR is part of an employee’s income that falls under PPh Article 21. In other words, the allowance is treated as additional income that remains taxable.

The taxation rules for THR are not governed by a single special article, but follow the framework of tax regulations in Indonesia. Some regulations forming the basis for taxation include PER-16/PJ/2016, Government Regulation (PP) Number 58 of 2023, and Finance Minister Regulation (PMK) Number 168 of 2023.

In practice, THR tax withholding is carried out by the employer. This means workers do not need to calculate or remit tax directly, because the withholding is done before the funds are received.

Even so, some workers feel the THR tax deductions are fairly large. This situation usually occurs because THR is paid together with monthly salary, causing total income in a single month to rise significantly. When income rises in a period, the effective tax rate charged can also increase in line with the progressive tax system.