At its 50th session on the morning of October 17, 2025, the Standing Committee of the National Assembly agreed to adjust and increase the personal income tax deduction for taxpayers and their dependents, effective from the 2026 tax year. This adjustment is based on a legally mandated mechanism to preserve purchasing power and appropriately reflect price/income fluctuations during the 2020-2025 period.
I. Adjusting and increasing the personal allowance deduction.
1. Current personal income tax rates (until the end of the 2025 tax period):
According to the Resolution 954/2020/UBTVQH14 June 2nd, 2020:
- The tax deduction for taxpayers is VND 11 million/month (VND 132 million/year);
- The tax deduction for each dependent is 4.4 million VND per month.
2. New personal income tax threshold (effective from tax period 2026):
According to the Resolution at the 50th Session of the Standing Committee of the National Assembly:
- The deduction amount for taxpayer leaves 15.5 million VND/month (186 million VND/year);
- The deduction amount for each dependent leaves 6.2 million VND/month.
💡 Increase by approximately 40.9 % compared to the current level from 2020.
II. Context and Impact of the Adjustment
1. Background
According to the Amended Personal Income Tax Law 2012 No. 26/2012/QH13 June 2nd, 2012:
" In the event that the consumer price index (CPI) fluctuates by more than 20% compared to... the time when the Law comes into effect or the date of the most recent adjustment to the personal allowance deduction The Government shall submit to the Standing Committee of the National Assembly a proposal to adjust the personal allowance stipulated in this clause to reflect price fluctuations, to be applied to the next tax period. "
According to data from the General Statistics Office, the CPI index is projected to reach its peak by the end of 2025. fluctuation of approximately 21.24% compared to the level at the time of the most recent adjustment in 2020 (according to Resolution 954/2020/UBTVQH14). The adjustment of the new personal income tax threshold is implemented to comply with the regulations in the amended Personal Income Tax Law of 2012, thereby ensuring that the after-tax income of employees accurately reflects price fluctuations from 2020.
2. Impact
According to the General Statistics Office – Ministry of Finance, preliminary results of the 2024 Household Living Standards Survey show that the average per capita income at current prices in 2024 will reach approximately 5.4 million VND/person/monthThis new deduction of 15.5 million VND is approximately... 3 times more the average per capita income, thereby increasing the tax threshold to reflect price and income fluctuations.
Example
- Employee A earns 14 million VND per month and has one dependent.
- Worker B earns 20 million VND per month and has no dependents.
| Items |
Worker A (01 dependent) |
Worker B (No dependents) |
| Income | 14,000,000 VND / month | 20,000,000 VND / month |
|
Insurance premium: 10.5% (Social Insurance 8% + Health Insurance 1.5% + Unemployment Insurance 1%) |
1,470,000 copper | 2,100,000 copper |
|
Personal allowance deduction |
15,500,000 copper | 15,500,000 copper |
|
Dependent deduction |
6,200,000 copper | 0 |
| Taxable income | 23,170,000 VND | 17,600,000 copper |
| Subject to personal income tax. | No | at the time the funds are credited |
👉 Employee B is subject to personal income tax with a tax rate starting from 5% for income exceeding VND 17,600,000.
Implementing this new GTGC level adjustment is expected to... The state budget will decrease by approximately 21,000 billion VND per year. Compared to the revenue and number of taxpayers under the current tax deduction level from 2020, although the state budget has decreased, adjusting the tax deduction level helps reflect market fluctuations, creates incentives for taxpayers to save and consume, and stimulates the economy.
III. What should businesses do?
1. From now until the end of 2025
⮞ Continue deducting at the current rate of VND 11 million for the taxpayer themselves and VND 4.4 million for each dependent (according to Resolution 954/2020/UBTVQH14).
Review dependent registration documents in accordance with regulations. Circular 111 / 2013 / TT-BTC and related procedural guidelines above Public Service Portal.
2. From the tax period of 2026 onwards
⮞ Update The new personal income tax threshold is VND 15.5 million for the taxpayer themselves and VND 6.2 million for each dependent, depending on the regulations on salaries and bonuses and the salary system.
⮞ Synchronization Data from forms, procedures, and related reports should accurately reflect the new deduction levels.
⮞ Review and inspection Dependent registration documents. Ensure that all supporting documents are complete and valid according to regulations.
⮞ Communicate Internally, guide employees on the new deduction rates, their application dates, and related information. Ensure employees fully understand their legal rights.
Raising the personal allowance helps to make the tax threshold more consistent with current price levels and income. Although it will be applied from the 2026 tax year, businesses and employees should update their payroll systems, review dependent records, and organize internal communication to ensure smooth compliance. This aligns with the spirit of "Understand correctly - Do correctly"Each implementation step must adhere to regulations, have sufficient documentation, and undergo regular checks to optimize costs and reduce risks during final settlement.