Your Payslip Changed in 2024 and the Tax Looked Different. Here's How the PPh 21 TER Method Works
6 min read
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6 min read
Picture a salary of Rp10 million a month. For eleven months, the tax line on your payslip says Rp200,000. Then December arrives and it says Rp800,000.
Nothing is wrong. Your tax did not quadruple. You just met the PPh 21 TER method, the way Indonesian employers have withheld income tax from monthly pay since January 2024.
This guide explains how the PPh 21 TER method works, in plain steps, with one worked example. The rules come from search summaries of DJP, DDTC, IKPI and Pajak.com read on 9 October 2026. We could not open the regulation itself, so check the official tables before you rely on any number.
PPh 21 is the income tax taken out of your salary. Your employer subtracts it and pays it to the tax office for you. This is called withholding.
TER stands for Tarif Efektif Rata-rata, or "average effective rate". It came with PP 58/2023 and the technical rules in PMK 168/2023. The aim, according to the sources, was to make monthly withholding simpler.
Before, your employer had to work out your net income, subtract allowances and apply tax brackets, every single month. With TER, they take your gross pay for the month and multiply it by one rate from a table. That is all.
Gross pay means your pay before anything is taken out.
Two things decide your rate.
1. Your category. It depends on your PTKP status. PTKP is the tax-free allowance, set by your marital status and number of dependents. According to the sources:
2. Your gross pay that month. Each category has a table of pay bands, and each band has a rate. For category A, the rate is 0% up to Rp5.4 million a month. The rates then climb in small steps. A few of them, as quoted by IKPI:
| Gross pay per month | TER |
|---|---|
| Up to Rp5,400,000 | 0% |
| Rp6,300,001 to Rp6,750,000 | 1.00% |
| Rp8,550,001 to Rp9,650,000 | 1.75% |
| Rp9,650,001 to Rp10,050,000 | 2.00% |
The sources say the top monthly rate is 34%, for pay above Rp1.4 billion a month. We did not see the full tables for categories B and C, so look them up in the PMK 168/2023 appendix.
TER is for permanent employees and people paid monthly. Daily-paid workers use a separate method.
Here is the part that surprises people.
TER is used for January to November only. In the last tax period of the year, normally December, your employer switches to the ordinary progressive rates in Article 17 of the Income Tax Law. DDTC and the DJP site both describe it this way.
Those rates are 5%, 15%, 25%, 30% and 35%, applied to slices of your yearly taxable income.
In December your employer does a true-up. They work out the tax you owe for the whole year. Then they subtract everything already withheld from January to November. You pay the difference.
Why not just keep using TER? Because TER is an average, and an average is only an estimate. December is when the estimate is corrected to the real bill.
Let us follow one person. This is our own illustration, not a real payslip.
The setup:
Step 1: January to November. Rp10,000,000 sits in the 9.65 to 10.05 million band, which is 2.00%. Tax each month is Rp200,000. Over eleven months that adds up to Rp2,200,000.
Step 2: the full-year bill.
| Item | Amount |
|---|---|
| Gross pay for the year | Rp120,000,000 |
| Less job cost allowance (5%, capped at Rp6 million a year) | Rp6,000,000 |
| Net income | Rp114,000,000 |
| Less PTKP for TK/0 | Rp54,000,000 |
| Taxable income | Rp60,000,000 |
| Tax at 5% (first bracket) | Rp3,000,000 |
The PTKP of Rp54 million and the 5% to 35% rates are what the sources report as unchanged for 2026. The job cost allowance is the standard 5% deduction, capped at Rp6 million a year.
Step 3: December. Rp3,000,000 minus Rp2,200,000 leaves Rp800,000.
So the tax was Rp200,000 for eleven months and Rp800,000 in December. The year's total is the same Rp3,000,000 that the old monthly method would have collected, at about Rp250,000 a month. TER just took a little less each month and caught up at the end.
Your own numbers will differ. Real payslips have BPJS contributions, bonuses, THR and sometimes other income. These change the year's tax and the rate band for the month they land in.
A few points to keep in mind:
If you want to plan for it, put the difference aside early. For a Rp10 million salary, that is about Rp600,000 extra in December compared with a normal month. If your THR also lands near year end, our guide on how to split your THR can help you plan both together.
PPh 21 only covers salary. Other income is taxed separately. A business owner's turnover tax is a different story, which we cover in PPh final for UMKM. Selling shares on the exchange has its own rate too, explained in the final tax on IDX stock sales.
Grab your December payslip from last year and your January one. Compare the PPh 21 line. Then use the DJP tax calculator or the official PMK tables to see if the numbers fit the steps above. If they do not, ask your payroll team to explain. They can show you the full-year calculation.
Your take-home pay is the money you actually invest, so it is worth knowing why it moves. Once you know your real monthly figure, open your NetWort dashboard to see how much of your portfolio value that money has built so far, and set your December top-up aside in advance.