Every January, the payroll department receives the same questions. Salaries have not increased, there are no bonuses, but the tax deductions on the December slip differ from the previous eleven months. Some employees suspect there has been a miscalculation. What actually happens is a change in the calculation basis, and this change is indeed regulated.
One tax year, two calculation bases
Starting January 1, 2024, when Government Regulation Number 58 of 2023 comes into effect, the withholding of Article 21 Income Tax for permanent employees from January to November uses an average effective rate. The mechanism is straightforward: the gross income for that month is multiplied by one rate from the table, without recalculating the annual position each month.
In the last tax period, generally December or the month an employee stops working, the basis changes. PMK 168/2023 stipulates that the last period is calculated using the progressive rate of Article 17 of the Income Tax Law on full-year income, then deducting all taxes that have been withheld from January to November. The difference appears on the December slip.
The monthly effective rate was never intended to be a final figure. It is an estimate deliberately made easy to implement, with adjustments postponed until the end of the year.
Why the difference is rarely zero
A significant difference almost always arises from uneven income throughout the year.
- Months that include THR (holiday allowance) or bonuses are deducted at an effective rate layer that is higher than the annual average.
- Salary increases in the middle of the year shift the annual position without correcting previous months.
- Months without income do not reduce anything until the final calculation is performed.
Therefore, the direction of the difference, whether underpayment or overpayment, cannot be predicted solely based on the salary amount.
Figures used in the December calculation
The calculation for the last period uses components that do not appear in the monthly calculations:
- Article 17 rates: 5 percent up to Rp60 million, 15 percent above Rp60 million up to Rp250 million, 25 percent above Rp250 million up to Rp500 million, 30 percent above Rp500 million up to Rp5 billion, and 35 percent above Rp5 billion.
- Job cost of 5 percent of gross income, capped at Rp500,000 per month or Rp6,000,000 per year.
- PTKP (non-taxable income) of Rp54,000,000 per year for status TK/0, plus Rp4,500,000 for married status and Rp4,500,000 per dependent, up to three dependents.
- Taxable Income is rounded down to the nearest thousand before being subjected to the rate.
This series passes through five rate layers with one capped deduction, making the result difficult to estimate in one's head. For those who want to see the figures in advance, this full-year calculation can be performed using the final tax period Article 21 calculator.
Deadlines binding employers
This section is often overlooked, as the deadlines pile up in the same month.
- Withholding of Article 21 Income Tax must be deposited no later than the 15th of the following month after the tax period ends.
- Reporting of the December Article 21 Income Tax SPT must be done by January 20, in accordance with Article 171 paragraph (1) PMK 81/2024.
- The December SPT must still be reported even if it is zero, even when there is no income payment at all, according to Article 171 paragraph (5) letter b PMK 81/2024.
- Excess withholding from January to November must be returned by the employer to the employee no later than January 31, in accordance with Article 21 paragraph (1) PMK 168/2023.
- For the December period, the issued withholding certificate is the annual A1 certificate for employees and private retirees, or A2 for state apparatus, according to Article 7 paragraph (1) PER-11/PJ/2025.
An administrative hurdle that often arises
The annual withholding certificate cannot be issued if the employee's identity still uses a temporary NIK (National Identity Number) in the Coretax system. The employee's NIK needs to be registered first, the withholding certificate for the temporary NIK is canceled, and then reissued with the correct identity. The Directorate General of Taxes provides validation and mass registration facilities for companies with many employees.
Understanding these two calculation bases makes conversations in January much shorter. The different deductions in December are not a sign of error, but rather the closure of the calculation for one tax year.
Sources
- Directorate General of Taxes, December, the Month of Annual Tax Adjustments
- Directorate General of Taxes, Important! Five Things to Consider When Reporting the December 2025 Article 21 Income Tax SPT
- Directorate General of Taxes, Exploring PP 58/2023: TER and Simpler Income Tax Calculations
- Ministry of Finance, PMK 168 of 2023 on Guidelines for Withholding Article 21 Income Tax
- DDTCNews, When are the Deadlines for Payment and Reporting of Article 21 Income Tax SPT? Here are the Regulations