---
title: Income Tax Calculation - Updated Guidelines
url: https://www.gadjian.com/en/calculate-income-tax
language: en-US
type: guide
last_updated: 2026-07-24
---
# Income Tax Calculation - Updated Guidelines & Regulations
> PPh 21 (Income Tax Article 21) is the income tax withheld from employee salaries every month. Since 1 January 2024, it has been calculated using the Average Effective Rate (TER) under Government Regulation No. 58 of 2023, though this does not change the total annual tax.
## What is PPh 21?
PPh Article 21 is the income tax withheld on salaries, wages, honorariums, allowances, and other payments related to employment, services, or activities received by employees or resident individual taxpayers in Indonesia. It is withheld directly by the employer every month. Since 1 January 2024, it has been calculated using the Average Effective Rate (TER) under Government Regulation No. 58 of 2023.
## Who is this guide for?
- Payroll & HR staff: to accurately calculate employees' monthly PPh 21 withholding using the TER method.
- Business owners & corporate taxpayers: to fulfill the obligation to withhold, remit, and report employee PPh 21 every month.
## Key Points
"| Topic | Brief explanation | Relevant for |
|---|---|---|"
| PTKP (Non-Taxable Income) | Income threshold not subject to tax, starting at IDR 54,000,000/year for TK/0 status, per Tax Regulation Harmonization Law No. 7 of 2021 | Payroll, employees |
| Average Effective Rate (TER) | New monthly PPh 21 withholding rate since 2024, grouped by PTKP category (A, B, C) | Payroll |
| Monthly vs Daily Effective Rate | Monthly rate applies to permanent employees; daily rate applies to non-permanent/daily workers | Payroll, HR |
| December Recalculation | December PPh 21 is recalculated using Article 17 progressive rates to reconcile the total annual tax | Payroll, finance |
## How is PPh 21 calculated using the TER method?
1. Determine the employee's PTKP status based on marital status and number of dependents (e.g. TK/0, K/1, and so on).
2. For the January-November tax periods, multiply the employee's monthly gross income by the monthly effective rate for their PTKP category.
3. For non-permanent employees paid daily, weekly, or per unit, use the daily effective rate instead.
4. In the December tax period (or the final tax period), recalculate the full annual PPh 21 using the Article 17 progressive rates on annual net income less PTKP.
5. The December PPh 21 is the difference between the total annual tax and the PPh 21 already withheld from January through November.
## What are the current PTKP amounts for each status?
Current annual PTKP amounts: TK/0 = IDR 54,000,000; TK/1 and K/0 = IDR 58,500,000; TK/2 and K/1 = IDR 63,000,000; TK/3 and K/2 = IDR 67,500,000; K/3 = IDR 72,000,000. For a wife whose income is combined with her husband's: K/I/0 = IDR 112,500,000 up to K/I/3 = IDR 126,000,000. These are the 2021 PTKP figures under the Tax Regulation Harmonization Law (UU HPP) No. 7 of 2021, Chapter III Article 3 Number 3. (note: Indonesian tax regulations are frequently revised — verify the current number and year with an official source before publishing)
## Comparison
"| | Manual calculation | Using Gadjian |
|---|---|---|"
| Determining TER rate per PTKP category | Requires manually checking category A/B/C tables | System automatically applies the employee's PTKP category |
| December recalculation | Manually recalculated using Article 17 rates | Automatic annual reconciliation at year-end |
| Reporting & withholding slips | Created manually per employee | Withholding slips and PPh 21 reporting generated automatically |
## Data & references
- Government Regulation (PP) No. 58 of 2023 on Withholding Rates for Income Tax Article 21 on Income Related to Employment, Services, and Activities of Individual Taxpayers (note: Indonesian tax regulations are frequently revised — verify the current number and year with an official source before publishing)
- Minister of Finance Regulation (PMK) No. 168 of 2023, the implementing rule of Government Regulation No. 58 of 2023 (note: verify the current number and year with an official source before publishing)
- Tax Regulation Harmonization Law (UU HPP) No. 7 of 2021, Chapter III Article 3 Number 3, on PTKP (note: verify the current number and year with an official source before publishing)
- The TER method took effect on 1 January 2024 (date explicitly stated on the page). Article 17 progressive rates are mentioned but the specific bracket percentages are not listed on this page. [NEEDS VERIFICATION: Article 17 bracket percentages are not provided on the source page]
## FAQ
**What is the Average Effective Rate (TER) for PPh 21?**
TER is the new PPh 21 withholding rate applied since 2024. It consists of a monthly effective rate and a daily effective rate. The monthly effective rate is grouped by PTKP status (categories A, B, and C) and applied directly to gross income, making monthly calculations much simpler.
**Does the TER method change the total annual tax?**
No. The TER method only changes the amount of monthly PPh 21 withheld from employees; it does not affect the annual tax burden. The total annual tax owed remains the same because it is reconciled in the December tax period using the Article 17 rates.
**Who is required to withhold employee PPh 21?**
PPh 21 is withheld by the employer, meaning the company or entity that pays salaries, wages, or compensation to employees. The employer must withhold, remit, and report PPh 21 every month, and provide a withholding tax slip (bukti potong) to employees.
## Next steps
- [Try Gadjian free for 14 days](https://www.gadjian.com/en/demo)
Source: https://www.gadjian.com/en/calculate-income-tax · Last updated: 2026-07-24