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title: "PPh 21 TER: When It Started and How Employers Apply It"
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**For Employers**[**Employment Law & Payroll**](https://www.jessonglobal.com/insights/topics/employment-law)Nov 4, 2026·8 min read

# PPh 21 TER: When It Started and How Employers Apply It

PPh 21 TER has applied since 1 January 2024 under PP 58/2023 and PMK 168/2023. See the categories, executive-pay brackets and a December true-up example.

![Jessica Baware](https://www.jessonglobal.com/_ipx/fit_cover&pos_top&q_76&s_44x44/cms-media/jessica-baware.jpeg)

By [**Jessica Baware**](https://www.jessonglobal.com/about#team)

Co-Founder & CEO, Jesson Global

PPh 21 TER (_tarif efektif rata-rata_, the average effective rate) has applied to employee income tax withholding in Indonesia since 1 January 2024, which answers the common search "PPh 21 TER mulai kapan". It was introduced by Government Regulation (PP) 58 of 2023 and the Finance Minister Regulation (PMK) 168 of 2023, and both are still in force as of November 2026. Employers apply a monthly TER rate from January to November, and then recalculate the full year at the normal income tax rates in December.

## When did PPh 21 TER start?

TER started on 1 January 2024. PP 58/2023 was issued on 27 December 2023 and applies "from 1 January 2024", according to the [~~Directorate General of Taxes (DJP)~~](https://pajak.go.id/id/artikel/mengulik-pp-582023-ter-dan-perhitungan-pph-yang-lebih-simpel). Its implementing rule, PMK 168/2023, was enacted on 29 December 2023 and also took effect on 1 January 2024, as the [~~JDIH Kemenkeu record~~](https://jdih.kemenkeu.go.id/dok/pmk-168-tahun-2023) shows.

PMK 168/2023 replaced several older rules, including PMK 252/PMK.03/2008 on withholding and PMK 250/PMK.03/2008 on the job-expense deduction. In practice, any payroll setup or internal guide written before 2024 needs checking, because it was built on rules that no longer apply.

## What changed for employers on 1 January 2024?

The monthly calculation became a lookup: gross monthly income times one rate from a table, chosen by the employee's tax-free allowance status (PTKP). Before TER, payroll teams had to weigh several variables each month, including employee status, regular and irregular pay, salary size and PTKP, as the DJP article describes.

The annual tax did not change. DJP says monthly TER "does not affect the total PPh 21 owed in one year", because the full-year calculation still uses the Article 17 rates of the Income Tax Law ([~~DJP~~](https://pajak.go.id/id/artikel/mengulik-pp-582023-ter-dan-perhitungan-pph-yang-lebih-simpel)). Put simply, TER changes when the tax is withheld during the year, but not how much tax the employee owes for the year.

There are two kinds of rate. Monthly TER covers permanent employees and others paid monthly, while a daily rate covers non-permanent workers paid by the day, week or piece: 0% up to an average of IDR 450,000 a day and 0.5% above that up to IDR 2.5 million.

## Which TER category applies to which employee?

The category follows the employee's PTKP status, and there are three monthly categories. DJP sets them out as follows ([~~DJP, January 2024~~](https://www.pajak.go.id/id/artikel/simpel-pakai-ter-begini-penjelasannya)):

| **Category** | **PTKP status** |
| --- | --- |
| A | TK/0, TK/1, K/0 |
| B | TK/2, TK/3, K/1, K/2 |
| C | K/3 |

TK means single (_tidak kawin_), K means married (_kawin_), and the number counts dependants up to three. In plain terms, single people and married people without children fall in Category A, and the category moves up with family size.

For senior hires, the useful part of the table is the top. The official [~~PP 58/2023 annex~~](https://www.pajak.go.id/sites/default/files/lampiran/Lampiran%20PP58TAHUN2023.pdf) runs Category A from 0% up to IDR 5.4 million a month to 34% above IDR 1.4 billion. These are selected Category A brackets for executive pay:

| **Gross monthly income (IDR)** | **Category A rate** |
| --- | --- |
| Above 56.3 million to 62.2 million | 20% |
| Above 77.5 million to 89 million | 23% |
| Above 89 million to 103 million | 24% |
| Above 125 million to 157 million | 26% |
| Above 157 million to 206 million | 27% |
| Above 206 million to 337 million | 28% |
| Above 454 million to 550 million | 30% |
| Above 1.4 billion | 34% |

The brackets get wide at executive pay levels, and a month with extra pay can jump several brackets. That is why a THR or bonus month often shows a much larger deduction than a normal month.

## How does the December calculation work?

In the last tax period of the year, which is December for an employee who works the whole year, the employer calculates the full year's tax at the Article 17 rates and deducts what was already withheld from January to November. DJP describes this as a single year-end recap per employee, with the adjustment made in the December PPh 21 return ([~~DJP~~](https://www.pajak.go.id/id/artikel/simpel-pakai-ter-begini-penjelasannya)).

The year-end calculation uses the ordinary rules for a permanent employee. Gross income is reduced by the job-expense deduction (_biaya jabatan_) of 5% of gross income, capped at IDR 6 million a year, which [~~DJP's contact centre confirmed in December 2025~~](https://news.ddtc.co.id/berita/nasional/1815760/kring-pajak-ingatkan-lagi-ketentuan-soal-biaya-jabatan-pegawai-tetap) is still the rule under PMK 168/2023. Employee pension and old-age contributions paid through the employer are also deductible, and then PTKP is subtracted. The remainder is taxed at 5% up to IDR 60 million, 15% to IDR 250 million, 25% to IDR 500 million, 30% to IDR 5 billion and 35% above that, as [~~CNBC Indonesia summarised in December 2025~~](https://www.cnbcindonesia.com/news/20251224091852-4-696923/cek-hitungan-pajak-2026-bagi-karyawan-gaji-umr-rp-10-juta).

December can come out low or even negative. A professional briefing published by the [~~Indonesian Institute of Accountants (IAI)~~](https://web.iaiglobal.or.id/assets/files/file_publikasi/20240124_PP%2058%20Tahun%202023_IAI_Rev.pdf) in January 2024 shows that a bonus paid in a month other than December "can make December's tax an overpayment". In simple terms, TER often withholds too much in the months with extra pay, and December gives the difference back.

## Worked example: an executive on IDR 100 million a month

Take a single employee with no dependants (TK/0, Category A) on a salary of IDR 100 million a month, with a THR of one month's pay in March, which is the 2026 entitlement for staff with 12 months of service under [~~the Manpower Minister's THR circular~~](https://www.setneg.go.id/baca/index/terbitkan_edaran_thr_keagamaan_2026_menaker_harus_dibayar_penuh_tak_boleh_dicicil). To keep the arithmetic clear, the example deducts only the job-expense allowance and ignores allowances, employer-paid insurance premiums and employee pension contributions.

| **Period** | **Gross income (IDR)** | **TER rate** | **PPh 21 withheld (IDR)** |
| --- | --- | --- | --- |
| Each normal month, Jan to Nov (10 months) | 100,000,000 | 24% | 24,000,000 |
| March, salary plus THR | 200,000,000 | 27% | 54,000,000 |
| Total withheld, Jan to Nov |  |  | 294,000,000 |
| Full-year tax at Article 17 rates | 1,300,000,000 |  | 316,000,000 |
| December withholding | 100,000,000 |  | 22,000,000 |

The full-year figure works out as IDR 1.3 billion gross, less IDR 6 million job-expense deduction and IDR 54 million PTKP, which leaves IDR 1.24 billion of taxable income and IDR 316 million of tax. December therefore withholds IDR 22 million, which is IDR 2 million less than a normal TER month. Put simply, the March THR month over-withheld, and December corrects it.

Two points follow for employers. The total cost of tax for the year is the same as before TER, but the net pay in a THR or bonus month is noticeably lower, so it helps to warn senior staff before their first bonus month. Offers quoted net of tax also need the full-year Article 17 figure, not a single TER month, because a TER month does not show the year's real tax.

## Is TER changing in 2026?

Not so far. The [~~JDIH Kemenkeu record for PMK 168/2023~~](https://jdih.kemenkeu.go.id/dok/pmk-168-tahun-2023) still lists it as in force with no amending regulation, as checked on 5 November 2026. DJP said in October 2025 that it was reviewing TER after complaints about bigger deductions in bonus and THR months, according to [~~Kontan~~](https://insight.kontan.co.id/news/otoritas-pajak-mengkaji-ulang-skema-tarif-efektif-rata-rata-pph-21), but we found no replacement rule.

The related 2026 regulations listed on the same record cover other questions, such as government-borne PPh 21 for graduate interns under PMK 6/2026. In practice, payroll teams should keep using the PP 58/2023 tables and watch for a new PMK.

Withholding is one part of the full cost of a hire, and the other part is social security. Our guide to the [~~BPJS employer contribution rate~~](https://www.jessonglobal.com/insights/bpjs-employer-contribution-rate) covers what the company pays on top of salary, and the Bahasa guide to [~~iuran BPJS Ketenagakerjaan perusahaan~~](https://www.jessonglobal.com/insights/iuran-bpjs-ketenagakerjaan-perusahaan) breaks the rates down by programme. For pay levels by role, see our [~~salary benchmark for Indonesia~~](https://www.jessonglobal.com/insights/salary-benchmark-indonesia).

If you are pricing a senior offer in Indonesia and want the package set against market data before you make it, our [~~executive search~~](https://www.jessonglobal.com/executive-search) team can help you scope the role and the budget.

## FAQ

### **When did PPh 21 TER start in Indonesia?**

PPh 21 TER started on 1 January 2024. It was introduced by PP 58/2023, issued on 27 December 2023, and PMK 168/2023, enacted on 29 December 2023. Both apply from 1 January 2024, and the JDIH Kemenkeu record still listed PMK 168/2023 as in force with no amendment on 5 November 2026. Employers use it for monthly withholding from January to November.

### **What is TER category A?**

Category A is the monthly TER table for employees whose PTKP status is TK/0, TK/1 or K/0, meaning single with up to one dependant or married with no dependants. Under the PP 58/2023 annex, its rates run from 0% for gross monthly income up to IDR 5.4 million to 34% for income above IDR 1.4 billion. Category B covers TK/2, TK/3, K/1 and K/2, and Category C covers K/3.

### **Does TER increase the tax an employee pays for the year?**

No. DJP states that monthly TER does not change the total PPh 21 owed for the year, because December recalculates the full year at the Article 17 rates. TER only changes the timing of withholding. Months with a bonus or THR are often over-withheld, and the December calculation corrects this, sometimes producing an overpayment in December.

### **What happens to PPh 21 in a bonus or THR month?**

The bonus or THR is added to that month's gross income, so the employee moves into a higher TER bracket for that month. In our example, IDR 100 million a month is taxed at 24%, while an IDR 200 million THR month is taxed at 27%. The extra withholding is balanced out in December, when the employer calculates the whole year at the normal rates.

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