How does Indonesia payroll tax work in 2026?
Every employer in Indonesia pays 10.24% of salary into BPJS, the national social security system. That single rate bundles health insurance, two pension funds, workplace injury cover, and death insurance. No separate pension line. No upper age trigger. Just one combined rate on the payroll from day one.
· Indonesia guide
Illustration · Jakarta, Indonesia
Indonesia employer payroll cost in 2026: the employer contributes 10.24% of salary into BPJS. That covers health insurance, the JHT provident fund, the JP pension, workplace accident cover, and life insurance. There is no separate pension line to calculate.
The employee contributes 4% of salary to BPJS. This covers health insurance, JHT, and JP. Both rates apply to basic salary plus fixed monthly allowances.
Income tax is withheld monthly under PPh 21. The non-taxable income floor (PTKP) is IDR 54,000,000 a year for a single person with no dependents. Above that, five progressive bands apply from 5% up to 35%.
Payroll runs monthly. Withheld PPh 21 must be paid to the state treasury by the 15th of the following month and reported by the 20th.
What does an employer pay in Indonesia BPJS contributions?
The employer pays 10.24% of salary into BPJS. This is the total for a standard low-risk industry.
The rate covers five programmes: BPJS Kesehatan (health) at 4%, JHT provident fund at 3.7%, JP pension at 2%, JKM life insurance at 0.3%, and JKK workplace accident cover at 0.24%. High-risk industries pay a higher JKK rate.
| Programme | What it covers | Employer rate |
|---|---|---|
| BPJS Kesehatan | Health insurance | 4% |
| JHT (Jaminan Hari Tua) | Provident fund / retirement lump sum | 3.7% |
| JP (Jaminan Pensiun) | Monthly pension benefit | 2% |
| JKM (Jaminan Kematian) | Life insurance / death benefit | 0.3% |
| JKK (Jaminan Kecelakaan Kerja) | Workplace accident cover (low-risk) | 0.24% |
| Total (low-risk) | 10.24% |
Salary ceiling for BPJS Kesehatan
BPJS Kesehatan contributions are capped at a salary base of IDR 12,000,000 per month. For employees earning above that threshold, the 4% health contribution is calculated on IDR 12,000,000, not on the actual salary.
JP pension contribution ceiling
The JP component (pension) has its own contribution ceiling. From March 2026 the JP ceiling is IDR 11,086,300 per month. Both employer and employee JP contributions are calculated on the lower of actual salary or this ceiling.
JKK risk class and industry
The JKK workplace accident rate varies by industry risk class. The 0.24% rate shown is for the lowest risk class (clerical and office-based work). Heavy manufacturing, construction, and mining carry higher rates and reach a total employer BPJS rate of up to 11.74%. Confirm the applicable risk class with your Indonesian BPJS registration.
What does an employee pay in Indonesia BPJS contributions?
The employee pays 4% of salary into BPJS.
That covers BPJS Kesehatan health insurance at 1%, JHT provident fund at 2%, and JP pension at 1%. The JKK and JKM programmes are employer-only. Employee contributions are withheld from payroll each month and remitted by the employer.
| Programme | What it covers | Employee rate |
|---|---|---|
| BPJS Kesehatan | Health insurance | 1% |
| JHT (Jaminan Hari Tua) | Provident fund / retirement lump sum | 2% |
| JP (Jaminan Pensiun) | Monthly pension benefit | 1% |
| Total | 4% |
The same salary ceilings that apply to the employer-side Kesehatan and JP contributions also apply to the employee side. Health contributions are calculated on salary up to IDR 12,000,000 per month. JP contributions use the same IDR 11,086,300 monthly ceiling effective March 2026.
All employee BPJS contributions are withheld at source by the employer and remitted to BPJS by the 15th of the following month alongside employer contributions. The employee does not file or pay BPJS directly.
JHT (the provident fund lump sum) accumulates in an individual account and is payable to the employee on retirement, reaching age 56, permanent disability, or death. It is not a monthly pension; it pays out as a lump sum.
Indonesia income tax bands for 2026 (PPh 21)
The non-taxable income floor (PTKP) is IDR 54,000,000 a year for a single person with no dependents. Income below that threshold is not taxed.
Above the PTKP, five progressive bands apply. The first band is 5% on taxable income up to IDR 60,000,000. The top band is 35% on taxable income above IDR 5,000,000,000.
| Taxable income band (IDR/year) | Rate |
|---|---|
| Up to IDR 54,000,000 (PTKP, non-taxable) | 0% |
| IDR 0 to IDR 60,000,000 | 5% |
| IDR 60,000,000 to IDR 250,000,000 | 15% |
| IDR 250,000,000 to IDR 500,000,000 | 25% |
| IDR 500,000,000 to IDR 5,000,000,000 | 30% |
| Above IDR 5,000,000,000 | 35% |
How the PTKP works
The PTKP is the annual non-taxable income floor set by the Indonesian Tax Authority (DJP). For a single person with no dependents (TK/0) it is IDR 54,000,000 a year. Married employees add IDR 4,500,000. Each dependent adds another IDR 4,500,000, up to three dependents. The PTKP is deducted from gross annual income before the progressive bands apply.
Severance payment tax rates
Severance payments are taxed at preferential final-tax rates under PPh 21: 0% on the first IDR 50,000,000; 5% on the portion up to IDR 100,000,000; 15% on the portion up to IDR 200,000,000; and 25% on any amount above IDR 200,000,000. These rates apply to the severance element only and are final (no further income-tax adjustment applies to that payment).
The PTKP non-taxable income floor is set by the Indonesian Directorate General of Taxes (Direktorat Jenderal Pajak). The current TK/0 rate of IDR 54,000,000 per year has been in place since Ministerial Regulation PMK-101/2016. All PPh 21 withholding is calculated after deducting the applicable PTKP from annualised salary.
How does Indonesia PPh 21 payroll withholding work?
Employers withhold PPh 21 income tax from employee salaries each month and remit it to the state treasury by the 15th of the following month.
The monthly tax return (SPT Masa PPh 21) is then filed electronically with DJP by the 20th of the following month. BPJS contributions follow the same monthly cycle and are remitted to BPJS separately by the 15th.
The payroll compliance calendar for a typical Indonesian employer each month:
- By the 15th of the following month: remit withheld PPh 21 to the state treasury via a designated bank (e-billing system). Remit BPJS contributions for both employer and employee.
- By the 20th of the following month: file the monthly PPh 21 SPT (tax return) electronically via DJP Online (e-Filing).
- January annual reconciliation: prepare the annual PPh 21 calculation for each employee. Issue SPT Tahunan (annual tax return) inputs for employees who file personally.
THR: the mandatory annual bonus
Indonesian law requires employers to pay a Tunjangan Hari Raya (THR) bonus. This is an additional one month of salary paid before the Eid al-Fitr (Lebaran) public holiday each year. New employees who have worked at least one month receive a pro-rated THR. The THR is a legal entitlement under Government Regulation No. 36 of 2021 and is subject to PPh 21 withholding in the same month it is paid. Missing or late THR payments trigger fines from the Ministry of Manpower.
Minimum wage in payroll
Wages cannot fall below the applicable provincial minimum wage (UMP). Jakarta's UMP for 2026 is IDR 5,729,876/month, the highest in Indonesia. Provincial minimums vary widely. Sector-level minimums (UMSP) may apply in some industries and provinces and can be higher than the provincial UMP. Always apply the UMP for the province where the employee works, not the province where the company is registered.
-
Collect salary and allowance data
Gather basic salary, fixed monthly allowances, and any variable pay (overtime, bonuses) for the month. BPJS and PPh 21 both apply to basic salary plus fixed allowances as the contribution base.
-
Calculate gross pay and PTKP deduction
Annualise gross pay and deduct the applicable PTKP non-taxable income floor for the employee's personal status. The result is taxable income for PPh 21 purposes.
-
Withhold PPh 21 income tax
Apply the five progressive bands to the taxable income figure. Divide the annual PPh 21 liability by 12 to get the monthly withholding amount. Deduct from net pay.
-
Calculate BPJS contributions
Compute employer BPJS at 10.24% and employee BPJS at 4% on the salary base, applying any Kesehatan or JP ceilings where salary exceeds the cap. Deduct the employee portion from net pay.
-
Remit to DJP and BPJS by the 15th
Pay withheld PPh 21 to the state treasury and pay total BPJS contributions (employer plus employee) to BPJS via e-billing by the 15th of the following month.
BPJS pension and social benefit contributions in the payroll stack
Indonesia does not have a separate pension line outside BPJS. The pension and provident fund components are bundled inside the BPJS employer rate of 10.24% and the employee rate of 4%.
JHT (the provident fund) and JP (the monthly pension) together account for 5.7% of the employer contribution and 3% of the employee contribution.
The two pension-like components within BPJS:
- JHT (Jaminan Hari Tua): the old-age savings or provident fund. Employer contributes 3.7%, employee contributes 2%. Accumulated in an individual account. Paid out as a lump sum on retirement (age 56), permanent disability, or death. Employees who resign may access it after a waiting period.
- JP (Jaminan Pensiun): the monthly pension annuity. Employer contributes 2%, employee contributes 1%. Contributions are capped at a monthly salary ceiling (IDR 11,086,300 from March 2026). Provides a monthly income on retirement at age 57 or older, subject to minimum contribution periods.
Because pension contributions are bundled inside the BPJS rates, there is no separate employer pension contribution to calculate alongside the BPJS total. Do not add a pension line on top of the 10.24% employer BPJS rate.
Retirement ages and access rules
The normal retirement age for JHT access is 56. The JP pension annuity becomes payable at age 57. JHT funds accumulated before the 2015 BPJS reform (when it was under Jamsostek) are subject to slightly different access rules. Employees who voluntarily resign can withdraw their JHT balance after a one-month waiting period under rules revised in 2022.
No auto-enrolment opt-out
BPJS registration is compulsory for all employers and employees from the first day of employment. There is no opt-out mechanism and no minimum-age threshold before enrolment is required. Failure to register employees exposes the employer to BPJS administrative penalties and back contributions.
How does Teamed handle Indonesia payroll for you?
Teamed becomes your legal employer of record in Indonesia for from $599 per employee per month, with zero FX mark-up in any currency.
Indonesian payroll, BPJS registration, PPh 21 withholding, THR payment, and full employment law compliance run on one platform.
Real HR and legal experts handle your Indonesia hires, from the first offer letter through every monthly PPh 21 filing and annual reconciliation. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Every BPJS contribution and THR payment passes through at cost, itemised on every invoice.
EOR payroll, contractor onboarding, and entity setup all live on one platform. An Indonesian contractor who converts to PKWTT permanent employment keeps their record. That same employee can graduate from EOR to your own Indonesian entity without switching systems. Run the Employer Cost Calculator to see the full picture. EOR is the right model for a first Indonesia hire, until it isn't. Start from the Indonesia hiring overview.
Key sources: PwC: Indonesia social security, PwC: Indonesia income tax, and DJP: PTKP rates.
Frequently asked questions
What is the employer BPJS contribution rate in Indonesia in 2026?
Employers pay 10.24% of salary into BPJS for a standard low-risk industry. That covers BPJS Kesehatan (health) at 4%, JHT provident fund at 3.7%, JP pension at 2%, JKM life insurance at 0.3%, and JKK workplace accident cover at 0.24%. High-risk industries pay more. BPJS Kesehatan contributions are capped at a monthly salary base of IDR 12,000,000.
What BPJS does an Indonesian employee pay?
Employees pay 4% of salary into BPJS: 1% for health (BPJS Kesehatan), 2% for the JHT provident fund, and 1% for the JP pension. The JKK accident and JKM life insurance programmes are employer-only. The employer withholds the employee contribution from payroll and remits it to BPJS by the 15th of the following month.
What are the Indonesia income tax bands for 2026?
Indonesia uses five progressive bands under PPh 21. Income up to the PTKP floor of IDR 54,000,000 a year is not taxed. Above that, the bands are: 5% on taxable income up to IDR 60,000,000; 15% up to IDR 250,000,000; 25% up to IDR 500,000,000; 30% up to IDR 5,000,000,000; and 35% above that.
When must Indonesian employers pay and file PPh 21?
Employers must remit withheld PPh 21 to the state treasury by the 15th of the following month. The monthly PPh 21 tax return (SPT Masa) must be filed electronically with DJP by the 20th of the following month. BPJS contributions are also due by the 15th. Missing either deadline triggers penalties and interest from DJP or BPJS respectively.
What is the THR bonus and is it compulsory?
THR (Tunjangan Hari Raya) is a compulsory annual bonus equal to one month of salary, paid before Eid al-Fitr (Lebaran) each year. It is required under Government Regulation No. 36 of 2021. Employees who have worked at least one month receive a pro-rated amount. The THR is subject to PPh 21 withholding in the month it is paid. Late or missing THR payments attract fines from the Ministry of Manpower.
The BPJS rate looks simple at first glance. One number: 10.24%. But the ceiling rules are where mistakes happen. Health contributions cap at one salary threshold. JP pension contributions cap at another. Get those wrong and you are either over-paying or creating a BPJS liability that surfaces at audit. We check both on every payroll run.
Indonesia bundles health insurance, two pension funds, accident cover, and life insurance into a single employer BPJS rate of 10.24%.
Then add PPh 21 income tax withheld monthly against five progressive bands, a mandatory THR bonus before Lebaran, and provincial minimum wages that differ across 38 provinces.
There is a lot to calibrate. Get the contribution ceilings right before the first payslip goes out.
