Key takeaways
- AWS isn't required by law. Whether staff get it, and how it's pro-rated, depends on the contract or handbook.
- Bonuses are Additional Wages for CPF. CPF applies only up to the Additional Wage ceiling.
- The AW ceiling is $102,000 minus the employee's Ordinary Wages subject to CPF for the year.
- High earners can end up paying CPF on only part of their bonus.
Is AWS compulsory?
No. MOM's position is that the Annual Wage Supplement (AWS), often called the 13th-month bonus, is not required by law. An employee is entitled to it only if their employment contract, company handbook or collective agreement says so.
Pro-rating AWS
There's no statutory formula for pro-rating. Whether staff with less than 12 months' service, or who leave before the payout date, get a pro-rated AWS depends on the contract. Set the rule clearly in your KETs or handbook, for example "pro-rated for employees with at least 3 months' service who are employed on 31 December".
Ordinary Wages vs Additional Wages
| Ordinary Wages (OW) | Additional Wages (AW) | |
|---|---|---|
| What it is | Wages for work done in the month, due by the 14th of the following month | All other wages, such as annual bonuses, AWS and leave encashment |
| CPF ceiling | $8,000 a month from 1 January 2026 | $102,000 − total OW subject to CPF in the year |
| When CPF is due | For the month the wages are for | For the month the bonus is paid |
Source: CPF Board
Worked examples
Both employees are under 55, so the total CPF rate is 37%.
| Employee A | Employee B | |
|---|---|---|
| Monthly salary in 2026 | $5,000 | $9,000 |
| OW subject to CPF (capped at $8,000/month) | $60,000 | $96,000 |
| AW ceiling ($102,000 − OW) | $42,000 | $6,000 |
| December bonus | $10,000 | $20,000 |
| Bonus subject to CPF | $10,000 (all of it) | $6,000 |
| Total CPF on the bonus (37%) | $3,700 | $2,220 |
Source: Avelogic calculation using CPF Board rates and ceilings
Employee B pays CPF on only $6,000 of a $20,000 bonus, because most of the $102,000 annual ceiling was used up by monthly salary.
How bonuses are taxed
Bonuses are taxable employment income and are reported on the employee's IR8A. Timing depends on the type of bonus. A non-contractual bonus is taxed in the year it's paid: IRAS's example is a bonus announced in December 2022 and paid in February 2023, which is taxed for Year of Assessment 2024. A bonus the employee is contractually entitled to can be taxed in the year the entitlement arises, which may differ from the year it's paid.
National Wages Council guidelines
The National Wages Council (NWC) issues yearly guidelines on wage increases and bonuses. The NWC met in August 2026 and plans to release its 2026/2027 guidelines, covering 1 December 2026 to 30 November 2027, by the end of October 2026. Check the MOM website for the published recommendations before setting this year's bonuses.
HRKaki Payroll
HRKaki tracks each employee's Ordinary Wages through the year and applies the Additional Wage ceiling to bonuses automatically.
Frequently asked questions
Is the 13th-month bonus (AWS) compulsory in Singapore?
No. AWS is not required by law. Employees are entitled to it only if their contract, handbook or collective agreement provides for it.
Do employers pay CPF on bonuses?
Yes. Bonuses are Additional Wages, and CPF is payable on them up to the Additional Wage ceiling of $102,000 minus the Ordinary Wages subject to CPF in the year.
What is the Additional Wage ceiling for 2026?
$102,000 minus the total Ordinary Wages subject to CPF for the year. With the Ordinary Wage ceiling at $8,000 a month, an employee earning $8,000 or more every month has an AW ceiling of $6,000.
Are bonuses taxable?
Yes. Bonuses are employment income and are reported on the IR8A. A non-contractual bonus is taxed in the year it's paid.
Sources
Information sourced from
- Central Provident Fund Board (CPF Board)
- Ministry of Manpower (MOM)
- Inland Revenue Authority of Singapore (IRAS)
Figures and rules in this article come from the official sources listed below and other published sources, checked on 13 October 2026. Avelogic is not affiliated with these agencies. For the authoritative and latest position, refer to the agency directly.
- MOM FAQ: Am I entitled to AWS and how is it calculated?
- MOM FAQ: AWS for employees with less than 12 months' service
- CPF Board: What is the Ordinary Wage ceiling?
- CPF Board: What is the Additional Wage ceiling?
- CPF Board (Ask.gov): Ordinary and Additional Wages
- IRAS: Salary, bonus, director's fee, commission and others
- MOM: Convening of the National Wages Council 2026/2027
This guide is general information based on official sources at the date shown, not legal or tax advice. Rules change, so check the CPF Board, IRAS, MOM or MOE for the latest position.