When each installment is paid
| Installment | Period covered | Payment date |
|---|---|---|
| First | 16 December to 15 April | 15 April |
| Second | 16 April to 15 August | 15 August |
| Third | 16 August to 15 December | 15 December |
Worked examples
| Fixed monthly salary | Earned in 4 months | Gross installment | Social Security (7.25%) | Net installment |
|---|---|---|---|---|
| 600 USD | 2,400 USD | 200.00 USD | 14.50 USD | 185.50 USD |
| 900 USD | 3,600 USD | 300.00 USD | 21.75 USD | 278.25 USD |
| 1,200 USD | 4,800 USD | 400.00 USD | 29.00 USD | 371.00 USD |
| 1,500 USD | 6,000 USD | 500.00 USD | 36.25 USD | 463.75 USD |
| 3,000 USD | 12,000 USD | 1,000.00 USD | 72.50 USD | 927.50 USD |
How it is calculated
- Total earned: salary for the months in the period plus overtime and commissions.
- Gross installment: total earned ÷ 12.
- Social Security: gross installment × 7.25%.
- Net installment: gross installment − Social Security, before income tax.
An employee who worked less than four months in the period receives the proportional part, with the same calculation over the months worked. The formulas match those explained by Telemetro and La Estrella de Panamá.
What this calculator does not include
It does not calculate income tax, which is only withheld if the employee’s income exceeds the taxable minimum, nor personal deductions, loan deductions or other agreements. For a full monthly salary calculation, see the net salary calculator, and for tax, the income tax calculator.
Frequently asked questions
When is the thirteenth-month pay (décimo tercer mes) paid in Panama?
In three installments a year: 15 April, 15 August and 15 December. In the public sector, the December installment is paid on 4 December, according to Telemetro.
How is the thirteenth-month pay calculated?
Add up everything earned in the four-month period, including salary, overtime and commissions, and divide by 12. With a fixed salary of 1,200 USD, each installment is 400 USD.
How much is deducted from the thirteenth-month pay?
The employee pays 7.25% Social Security on the installment. Income tax applies only if the employee’s income exceeds the taxable minimum.
What if the employee worked less than four months in an installment?
The proportional part is calculated: the total earned in the months worked, divided by 12.
Related articles and tools
- Net salary calculator for Panama
- Panama income tax calculator
- Minimum wage in Panama: how it works
- Public holidays in Panama
Sources
- Cabinet Decree 221 of 1971, which establishes the thirteenth-month pay (text on Justia Panamá).
- Decree 19 of 1973, which regulates it (National Assembly).
- Telemetro, how it is calculated, payment dates and deductions.
- La Estrella de Panamá, guide and calculation examples.