San Salvador, El Salvador Capital City.
El Salvador’s Legislative Assembly approved the “Quincena 25” law this week, proposed by President Nayib Bukele, granting a January income equal to 50% of monthly wages to workers earning up to $1,500.
The measure applies to public and private-sector employees and mandates payments between January 15 and January 25 each year. This new income will provide a temporary income boost at the start of the calendar year.
Government officials said the initiative aims to ease household financial pressure during January, traditionally a high-expense month, while injecting additional liquidity into the national economy.
Announcing the policy, President Bukele said that Quincena 25 will help stimulate economic activity and directly improve the living conditions of about 1 million families nationwide.
How will the Law be Implemented?
Under the law, the benefit will be paid in addition to regular biweekly wages and base salaries. It will be exempt from income tax, social security, and pension contributions, and cannot be subject to garnishment.
Presenting the measure to lawmakers, Nayib Bukele said it is the first labor benefit approved in decades beyond minimum wage increases, calling it a significant shift in national labor policy.
Why January?
Government officials said January was selected because many workers receive their December salaries early, along with Christmas bonuses, which increase year-end spending and often leave households with limited resources to cover expenses at the start of the new year.
With the added payment arriving in January, Nayib Bukele said the measure is intended to reverse that pattern, transforming what is typically the most financially difficult month into one of the most favorable for families.
Who benefits from the 25th pay period?
The law applies to public and private sector workers earning up to $1,500 per month. Beginning in January 2026, the additional payment will be mandatory for all public employees.
In the private sector, participation will be voluntary in 2026 and become mandatory in 2027. To encourage early adoption, the law grants tax incentives to participating companies.
Nayib Bukele said private employers that choose to pay the benefit in 2026 may deduct 100% of the granted amount from their income tax, easing the cost of compliance.
With legislative approval secured, the government will proceed with the formal implementation of the 25th Payday Law, ensuring that all public sector employees receive the additional income from January 2026 onward.
Private companies that choose to apply the benefit ahead of the mandatory timeline will be eligible this year for the announced tax deduction, allowing them to offset the full cost against income tax.
