THE SOCIALIST REPUBLIC OF VIET NAM
Government News
Finance ministry proposes raising personal income tax family deduction
VGP - The Ministry of Finance proposed that the deduction level for taxpayers is VND13.3-15.5 million per month and the deduction level for each dependent is VND5.3-6.2 million/month in 2026.
The Ministry of Finance suggests reducing tax list to five brackets, with the highest rate capped at 35 percent.
This is part of a draft resolution of the National Assembly Standing Committee on consensus on revising the family circumstance-based deduction policy under the Personal Income Tax Law.
The ministry attributed the CPI hike of around 21.24 percent in the 2020-2025 period, surpassing the 20 percent benchmark for adjustment.
Since July 1, 2020, under Resolution 954/2020/UBTVQH14, taxpayers have been entitled to a deduction of VND 11 million per month for themselves and VND 4.4 million per month for each dependent, regardless of their place of residence.
Personal income tax includes taxes from employees and individual business households. It is one of the three key pillars of the state budget, alongside corporate income tax and value-added tax (VAT).
Cutting brackets of personal income tax list
The Ministry of Finance also suggested the number of tax brackets shoul be reduced from 7 to 5 for residents while making amendments to the Personal Income Tax Law.
The move aims to make the tax system more stable, increase its flexibility, encourage income growth, and prevent the unreasonable situation where middle-income workers still face high tax rates.
Accordingly, the ministry submitted two options as follow:
| Tax brackets | At present |
| Option 1 | Option 2 | |||
| Income (million VND per month | Tax rate (%) |
| Income (million VND per month | Tax rate (%) | Income (million VND per month | Tax rate (%) | |
| Tier 1 | from 5 | 5 |
| from 10 | 5 | from 10 | 5 |
| Tier 2 | >5-10 | 10 |
| >10-20 | 15 | >10-30 | 15 |
| Tier 3 | >10-18 | 15 |
| >30-50 | 25 | >30-60 | 25 |
| Tier 4 | >18-32 | 20 |
| >50-80 | 30 | >60-100 | 30 |
| Tier 5 | >32-52 | 25 |
| above 80 | 35 | above 100 | 35 |
| Tier 6 | >52-80 | 30 |
| ||||
| Tier 7 | over 80 | 35 |
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