By The Ledger desk · Last verified 11 October 2026
The Annual Wage Supplement (AWS), better known as the 13th month, is a single extra payment on top of your yearly pay. In Singapore it is not compulsory: you are owed it only if your employment contract or collective agreement says so, and the same applies to performance bonuses and variable payments. Both are taxable employment income. A variable bonus is taxed in the year it is paid; a contractual one, such as AWS, in the year you become entitled to it, which is usually the payment year. Both are Additional Wages for CPF, so they attract contributions up to the Additional Wage ceiling of S$102,000 minus your Ordinary Wages for the year.
Year-end money is lovely to receive and easier to plan for when you know what will be taken out first. Here is the full picture.
Quick facts
- AWS and bonuses are not required by law; your contract decides.
- Employers may negotiate a lower AWS if business results are exceptionally poor.
- For employers that did not pay AWS before 26 August 1988, AWS cannot exceed one month’s salary.
- CPF: the monthly Ordinary Wage ceiling is S$8,000 in 2026; the annual total ceiling is S$102,000.
- Bonuses are not part of “basic salary” for Employment Act thresholds or overtime.
- Income tax on a bonus is paid the following year, as part of your normal assessment.
AWS, bonus or variable pay: what’s the difference?
| Payment | What it is | Owed by law? | Taxed in |
|---|---|---|---|
| AWS (13th month) | A fixed extra payment, often one month’s pay, usually in December | Only if in contract or collective agreement | Year you become entitled (usually year paid) |
| Performance bonus | A one-off reward, usually at year-end, often discretionary | Only if in contract | Year paid, if non-contractual |
| Variable payment | Incentive tied to company or individual results | Only if in contract | Year paid, if non-contractual |
IRAS gives a clear example: a bonus for the year ending 31 December 2011, paid on 1 February 2012, is 2012 income. If a contractual bonus is paid only if you are still employed on the payment date, you become entitled, and are taxed, only when that condition is met.
How CPF works on bonuses
Your monthly salary counts as Ordinary Wages, with CPF charged on up to S$8,000 a month in 2026. AWS and bonuses are Additional Wages. CPF is charged on them only up to the AW ceiling:
AW ceiling = S$102,000 − total Ordinary Wages subject to CPF in the year.
High earners with a big bonus can hit the ceiling, so part of the bonus attracts no CPF and is paid fully in cash.
Worked example: one month AWS plus a two-month bonus
Daniel, 35, earns S$6,000 a month. In December he gets one month’s AWS (S$6,000) and a two-month bonus (S$12,000).
- Ordinary Wages for the year: 12 × S$6,000 = S$72,000.
- AW ceiling: S$102,000 − S$72,000 = S$30,000. His S$18,000 of Additional Wages is under it, so all of it attracts CPF.
- His own CPF at the 20% employee rate (age 55 and below): 20% × S$18,000 = S$3,600. He receives S$14,400 in cash.
- Tax: the S$18,000 is added to his income for the year of payment, and his CPF on it reduces his taxable income. If his marginal rate is 7%, tax on the remaining S$14,400 is about S$1,008, payable the following year.
So of S$18,000, around S$13,400 is his to spend once tax is set aside, with S$3,600 (plus his employer’s share) in CPF.
Leaving your job around bonus time
MOM’s position is that whether you get AWS when you leave just before or around payday depends on your contract or collective agreement. Many contracts pay AWS pro-rated for part-year service but exclude staff who have resigned or are serving notice on the payment date. Read the clause before you resign.
The WahLiao Verdict
Treat AWS written into your contract as part of your pay, and a discretionary bonus as a welcome surprise, never as money already spent. When it lands, set aside the tax first (a separate account works well), then decide calmly between debts, savings and treats. If you plan to change jobs, time your resignation after the payment date your contract names.
Questions people ask
Can my employer cancel the AWS?
If it is in your contract, it is owed, though MOM notes a lower amount can be negotiated when business results are exceptionally poor. If it is not in your contract, it is at the employer’s discretion.
Is the 13th month taxed at a special rate?
No. It is added to your employment income and taxed at the normal progressive resident rates.
Can I put my bonus into SRS or CPF to cut the tax?
Yes, if you have room. SRS contributions and CPF cash top-ups both earn relief within their annual caps, if made by 31 December.
Does the bonus count for overtime pay?
No. Overtime under the Employment Act is based on basic salary, which excludes bonuses and AWS.
Sources: Ministry of Manpower, AWS, bonus and variable pay; Ministry of Manpower, AWS entitlement FAQ; IRAS, tax treatment of bonuses; DBS, summary of 2026 CPF wage ceilings. The Ledger explains; it does not advise.
Read next: CPF Contribution Rates in 2026: What You and Your Employer Pay at Every Age · Income Tax in Singapore: The Resident Rates, the Reliefs and the 18 April Deadline · Back to The Ledger
For what’s worth it this week, with the bill shown, read The WahLiao Week.
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