Since 1 January 2024, employers in Indonesia withhold employee income tax (PPh 21) in two stages. From January to November, you multiply each month's gross income by a single effective rate (TER) taken from a government table. In December, you recalculate the whole year with the progressive income tax rates and withhold the difference. The monthly rate depends on the employee's tax status (category A, B or C) and on gross income, and gross income includes the BPJS premiums the employer pays and any THR paid that month.
TER does not change how much tax an employee owes over a year. It changes when the tax is withheld, and it makes some months look very different from others. This guide covers the categories, what counts as gross income, the December recalculation and the filing deadlines, with worked examples at RainTech's salary tiers.
PPh 21 at a glance
| Item | Rule | Source |
|---|---|---|
| Who withholds | The employer, as withholding agent | PMK 168/2023 |
| January to November | Monthly gross income × TER rate for the employee's category | PP 58/2023 |
| December (or the month employment ends) | Annual tax at Article 17 rates, minus tax already withheld | PP 58/2023; PMK 168/2023, Art. 1 |
| Gross income includes | Salary, allowances, overtime, bonuses, THR, and employer-paid JKK, JKM and BPJS Kesehatan premiums | PMK 168/2023, Art. 5(3) |
| Deductions | Applied only in the annual calculation: job expense (5%, maximum IDR 6,000,000 a year) and the employee's own pension and old-age contributions | PMK 168/2023, Art. 10 |
| Payment deadline | 15th of the following month | PMK 81/2024 |
| Monthly return | 20th of the following month | PMK 81/2024 |
| Over-withheld tax | Refunded to the employee, with the annual withholding slip, by the end of the month after the final tax period | PMK 168/2023, Art. 21(1) |
Step 1: find the employee's TER category
Each employee's category comes from their non-taxable income status (PTKP): whether they are single (TK) or married (K), and how many dependants they claim, up to three. The status at the start of the tax year sets the category for that year.
| Category | PTKP status | Annual PTKP |
|---|---|---|
| A | TK/0 | IDR 54,000,000 |
| A | TK/1, K/0 | IDR 58,500,000 |
| B | TK/2, K/1 | IDR 63,000,000 |
| B | TK/3, K/2 | IDR 67,500,000 |
| C | K/3 | IDR 72,000,000 |
A single engineer with no dependants is TK/0, category A. A married engineer with one child is K/1, category B.
Step 2: work out monthly gross income
The TER rate is applied to gross income before any deduction. Under Article 5(3) of Finance Minister Regulation 168 of 2023 (PMK 168/2023), gross income for a permanent employee includes:
- salary and every allowance, including overtime pay;
- bonuses and THR, in the month they are paid;
- the JKK (work accident) and JKM (death) contributions the employer pays to BPJS Ketenagakerjaan;
- the BPJS Kesehatan health contribution the employer pays.
The employer's JHT (old-age) and JP (pension) contributions are not added. They are a cost to the employer, not income to the employee. The employee's own 2% JHT and 1% JP contributions are not deducted each month either; they come off only in the annual calculation.
For a Tier 2 engineer on IDR 21,480,000 ($1,200) a month, at the 0.24% low-risk JKK rate that applies to most software companies:
| Component | Calculation | IDR |
|---|---|---|
| Salary | 21,480,000 | |
| JKK, employer | 0.24% × 21,480,000 | 51,552 |
| JKM, employer | 0.30% × 21,480,000 | 64,440 |
| BPJS Kesehatan, employer | 4% × 12,000,000 (wage ceiling) | 480,000 |
| Monthly gross income | 22,075,992 |
The contribution rates and ceilings are explained in our BPJS guide for employers.
Step 3: apply the TER rate
Government Regulation 58 of 2023 (PP 58/2023) sets a table of monthly rates for each category, from 0% up to 34%. The rows below cover the salaries most tech employers pay. The full tables start at IDR 5,400,000 (A), 6,200,000 (B) and 6,600,000 (C) a month, below which the rate is 0%.
| Monthly gross income (IDR) | Category A | Monthly gross income (IDR) | Category B |
|---|---|---|---|
| 13,750,001 to 15,100,000 | 6% | 13,600,001 to 14,950,000 | 5% |
| 15,100,001 to 16,950,000 | 7% | 14,950,001 to 16,400,000 | 6% |
| 16,950,001 to 19,750,000 | 8% | 16,400,001 to 18,450,000 | 7% |
| 19,750,001 to 24,150,000 | 9% | 18,450,001 to 21,850,000 | 8% |
| 24,150,001 to 26,450,000 | 10% | 21,850,001 to 26,000,000 | 9% |
| 26,450,001 to 28,000,000 | 11% | 26,000,001 to 27,700,000 | 10% |
| 28,000,001 to 30,050,000 | 12% | 27,700,001 to 29,350,000 | 11% |
| 30,050,001 to 32,400,000 | 13% | 29,350,001 to 31,450,000 | 12% |
| 32,400,001 to 35,400,000 | 14% | 31,450,001 to 33,950,000 | 13% |
| 35,400,001 to 39,100,000 | 15% | 33,950,001 to 37,100,000 | 14% |
| 39,100,001 to 43,850,000 | 16% | 37,100,001 to 41,100,000 | 15% |
| 43,850,001 to 47,800,000 | 17% | 41,100,001 to 45,800,000 | 16% |
| 47,800,001 to 51,400,000 | 18% | 45,800,001 to 49,500,000 | 17% |
| 51,400,001 to 56,300,000 | 19% | 49,500,001 to 53,800,000 | 18% |
| 56,300,001 to 62,200,000 | 20% | 53,800,001 to 58,500,000 | 19% |
| 62,200,001 to 68,600,000 | 21% | 58,500,001 to 64,000,000 | 20% |
| 68,600,001 to 77,500,000 | 22% | 64,000,001 to 71,000,000 | 21% |
Applied to RainTech's starting tiers, for a single engineer (TK/0) and a married engineer with one child (K/1):
| Tier | Salary | Monthly gross | TK/0 (A) | K/1 (B) |
|---|---|---|---|---|
| Tier 1, entry | IDR 14,320,000 ($800) | IDR 14,877,328 | 6%: IDR 892,640 | 5%: IDR 743,866 |
| Tier 2, mid | IDR 21,480,000 ($1,200) | IDR 22,075,992 | 9%: IDR 1,986,839 | 9%: IDR 1,986,839 |
| Tier 3, senior | IDR 35,800,000 ($2,000) | IDR 36,473,320 | 15%: IDR 5,470,998 | 14%: IDR 5,106,265 |
The THR month
Because THR is added to the gross income of the month it is paid, that month usually lands several bands higher. For the Tier 2 engineer, the month with THR has gross income of IDR 43,555,992, taxed at 16% under category A: IDR 6,968,959 withheld instead of IDR 1,986,839. For Tier 3, gross income of IDR 72,273,320 is taxed at 22%: IDR 15,900,130.
Nothing is overcharged. The December recalculation settles the year. But the employee's THR payslip will show far more tax than a normal month, and it helps to explain that before it arrives. Our THR guide for employers covers the allowance itself and the 2027 deadlines.
Step 4: the December recalculation
In the final tax period, December or the month an employee leaves (PMK 168/2023, Article 1), you calculate the tax on the whole year at the progressive rates in Article 17 of the Income Tax Law and withhold whatever has not been withheld already. The Article 17 rates for individuals are 5% on taxable income up to IDR 60 million, 15% up to IDR 250 million, 25% up to IDR 500 million, 30% up to IDR 5 billion and 35% above that.
A full year for the single Tier 2 engineer, with THR paid once and 2026 contribution ceilings:
| Line | Calculation | IDR |
|---|---|---|
| Annual gross income | 12 × 22,075,992 + THR 21,480,000 | 286,391,904 |
| Job expense deduction | 5% of gross, capped | (6,000,000) |
| Employee JHT contribution | 2% × 21,480,000 × 12 | (5,155,200) |
| Employee JP contribution | 1% × 11,086,300 ceiling × 12 | (1,330,356) |
| Net income | 273,906,348 | |
| PTKP, TK/0 | (54,000,000) | |
| Taxable income | rounded down to the thousand | 219,906,000 |
| Tax for the year | 5% × 60,000,000 + 15% × 159,906,000 | 26,985,900 |
| Withheld January to November | 10 × 1,986,839 + 6,968,959 (THR month) | (26,837,349) |
| December withholding | 148,551 |
The JP ceiling is adjusted every March, so a real payroll uses the ceiling in force each month. The example applies the March 2026 figure to the whole year to keep the arithmetic readable.
December can go the other way. If the TER months withheld more than the annual tax, the difference goes back to the employee, together with the annual withholding slip, by the end of the following month (PMK 168/2023, Article 21(1)). For a December final period, that is the end of January.
Paying and reporting
Under Finance Minister Regulation 81 of 2024, withheld PPh 21 is paid by the 15th of the month after the tax period, and the monthly return is filed by the 20th. Both run through the tax authority's Coretax system. After the final tax period, each employee receives an annual withholding slip (bukti potong A1), which they need for their own annual return.
The employer registered as withholding agent does all of this. A foreign company with no Indonesian entity has no tax registration to withhold under, which is one of the reasons foreign companies hire through an Employer of Record: the EOR is the legal employer, withholds PPh 21 each month, files the returns and issues the slips.
Gross or net: decide before the offer
A candidate who quotes a salary may mean take-home pay. Before you make an offer, agree in writing whether the salary is gross, with PPh 21 and the employee's BPJS contributions deducted from it, or net, with the employer bearing them. At Tier 2, PPh 21 alone takes about 9% of a normal month and far more in the THR month, so the difference between the two readings is large. Our EOR pricing guide shows how these costs appear on an invoice.
FAQs
Does TER change how much tax an employee pays?
No. The tax for the year is still calculated at the Article 17 progressive rates in the final tax period. TER only sets how much is withheld in each of the other months.
Why is December withholding so small, or negative?
Because January to November already withheld close to the annual tax, or more than it. Any excess is refunded to the employee by the end of January (PMK 168/2023, Article 21(1)).
Which category does a married employee with one child use?
K/1 falls in category B. A married employee with no dependants (K/0) is category A, and K/3 is the only status in category C.
What happens when an employee leaves mid-year?
The month they leave becomes their final tax period (PMK 168/2023, Article 1). You run the annual calculation in that month instead of December and issue the annual slip.
Are employer BPJS contributions taxable to the employee?
Partly. The employer's JKK, JKM and BPJS Kesehatan contributions are added to gross income (PMK 168/2023, Article 5(3)). The employer's JHT and JP contributions are not.
Sources
- Government Regulation No. 58 of 2023 on PPh 21 withholding rates (PP 58/2023), including the TER tables: JDIH BPK
- Finance Minister Regulation No. 168 of 2023 on PPh 21 withholding (PMK 168/2023), Articles 1, 5, 10 and 21: JDIH BPK
- Finance Minister Regulation No. 81 of 2024 on payment and reporting deadlines (PMK 81/2024): DDTC summary
- BPJS contribution rates and the March 2026 JP wage ceiling: RainTech's BPJS guide
Figures reflect regulations in force in September 2026. USD amounts are converted at IDR 17,900. Tax rounding follows PMK 168/2023; monthly figures are rounded to the rupiah. This guide is general information for employers, not tax advice for a specific case.