From 2026 onwards, Vietnam's tax system is expected to undergo significant transformations. These adjustments aim not only to modernize management but also to support taxpayers in the new economic context. The following are the key points that have been reinterpreted.
Reforming Personal Income Tax for Employees
To help taxpayers easily visualize the significant changes to personal income tax policy, the table below summarizes and compares the main points before 2026 and from 2026 onwards.
| Content | Before 2026 | From 2026 |
| Personal allowance for the taxpayer | 11 million VND/month | 15.5 million VND/month |
| Personal allowance for dependents | 4.4 million VND/month | 6.2 million VND/month |
| Number of tax brackets for personal income tax | 7 steps | 5 steps |
| The complexity of tax calculation | High tax pressure due to dense tax brackets. | Reduce tax burden, increase disposable income. |
Adjustments to personal deductions and the streamlining of tax brackets from 2026 indicate a direction for reforming personal income tax policy towards reducing the tax burden, simplifying procedures, and better aligning with fluctuating living costs. This is considered a positive change, helping taxpayers, especially those in the middle-income group, increase their net income and more easily comply with tax obligations in the new period.
Deductions when calculating personal income tax.
When calculating income for personal income tax purposes, the law allows taxpayers to deduct certain legitimate expenses. The application of these deductions aims to ensure that tax calculations accurately reflect actual financial capacity, while also helping to reduce the financial burden on individuals. The main deductions include:
- Personal deductions: Applicable to the taxpayer themselves and eligible dependents. This is a core deduction that helps employees maintain a minimum standard of living before fulfilling their tax obligations to the State. Compared to the previous rates, the deduction for the taxpayer has increased by 4.5 million VND/month and for each dependent by 1.8 million VND/month. This significantly raises the income threshold for employees to be exempt from tax.
- Deductions for voluntary insurance and pension funds: This includes contributions to social insurance, health insurance, unemployment insurance, or voluntary pension funds as prescribed. These expenses are excluded from taxable income to encourage employees to participate in the social security system and ensure long-term financial security.
- Deductions for charitable, humanitarian, and educational contributions: Donations and support for eligible charitable, humanitarian, or educational activities will be deductible when determining taxes, thereby contributing to promoting social responsibility and spreading humanitarian values in the community.
Based on taxable income levels, tax rates are applied in specific brackets to ensure progressive and fair taxation. Below is a table of tax rates corresponding to each income level for your easy reference and application.
| Tax bracket | Income level (million VND/month) | Applicable tax rate |
| 1 | Up to 10 | 5% |
| 2 | Between 10 and 30 | 15% |
| 3 | Between 30 and 60 | 25% |
| 4 | Between 60 and 100 | 30% |
| 5 | Over 100 | 35% |
As shown in the table above, tax rates are applied according to income brackets with a progressive principle; the higher the income, the greater the corresponding tax payable. Understanding the tax brackets helps taxpayers proactively calculate their tax obligations, minimize errors, and ensure compliance with current laws and regulations.
Taxable income threshold before insurance deductions.
To help taxpayers easily determine their taxable personal income based on the number of dependents, the following summary table presents a comparison between the monthly income threshold (excluding insurance contributions) currently applied before 2026 and the corresponding adjusted income threshold applied from 2026 onwards for each specific case.
| Before 2026 | Number of dependents | From 2026 |
| 11 | 0 | 15.5 |
| 15.4 | 1 | 21.7 |
| 19.8 | 2 | 27.9 |
| 24.2 | 3 | 34.1 |
| 28.6 | 4 | 40.3 |
Overall, from 2026 onwards, the personal allowance will be adjusted to better reflect the actual cost of living, especially for taxpayers with many dependents. Compared to the period before 2026, the allowances corresponding to different numbers of dependents have changed significantly, thereby reducing tax burdens and providing better support for workers, especially households with two or more dependents. The comparison table above helps taxpayers easily assess the impact of the new policy and proactively calculate their tax obligations during the period of application from 2026.
Personal income tax in cases of unusual income.
Besides income from salaries and wages, personal income tax laws also stipulate tax obligations for certain irregular income and asset transfer activities. Each of these types of income is subject to its own tax calculation method and tax rate, specifically:
- Income from lottery winnings; gifts; royalties, franchise fees; inheritance: Individuals must pay tax at rate 10% on the portion of income exceeding 20 million VND for each instance.
- Income from real estate transfers: Personal income tax is calculated at a rate of 2% on the transfer value of each transaction, regardless of whether the individual makes a profit or not.
- Income from the transfer of gold bars: A tax rate of 0.1% is applied to the transfer value of each transaction.
Benefits of personal income tax in 2026 compared to the previous regulations.
The adjustment of the tax schedule, aimed at simplifying the number of tax brackets and increasing personal deductions, has had a clearly positive impact on taxpayers. Accordingly, individuals with taxable income between 10 and 30 million VND per month now only apply a tax rate of 10%, significantly lower than the 15% or 20% rates previously applied in the intermediate tax brackets.
Example: An individual earns 25 million VND/month, has one dependent, and is required to pay insurance premium 10.5%.
- According to the old regulations: Taxable income was approximately 12.5 million VND, and the tax payable was approximately 1 million VND per month.
- New regulations 2026: Taxable income = 25 – 15.5 – 6.2 – (25 * 10.5%) = 1.2 million VND. Tax payable (level 1 – 5%) = 0.06 million VND/month. Thus, employees with an income of 25 million VND/month save more than 900,000 VND in taxes each month thanks to the new policy.
New regulations for household businesses and e-commerce.
The new policy tightens regulations but also expands the tax exemption threshold to support small businesses.
- Taxable revenue threshold: Raising the revenue threshold for tax payment from VND 200 million/year to VND 500 million/year.
- Invoice management: Households with annual revenue exceeding 1 billion VND are required to implement electronic invoices generated from point-of-sale systems.
- E-commerce tax: E-commerce platforms (Shopee, Lazada, TikTok, etc.) will be responsible for declaring and paying taxes on behalf of sellers. For individuals doing business on social media, revenue management will be more strictly controlled through digital tools.
New tax calculation method
From 2026, to help individuals, business households, and organizations easily determine their tax obligations, the table below summarizes the personal income tax (PIT) and value-added tax (VAT) rates applicable to each entity and type of business activity, based on whether or not costs can be determined, as well as the scale of revenue generated.
| Object | Type/Size of Revenue | Personal income tax | VAT tax rate |
| Determine the cost | Revenue under 3 billion VND | 15% | 1% |
| Revenue ranges from over 1 billion to 50 billion VND. | 17% | 3% | |
| Revenue exceeding 50 billion VND | 20% | 5% | |
| Costs are not determined. | Distribution and supply of goods | 0.5% | 1% |
| Production, transportation, services related to goods, construction including material procurement. | 1.5% | 3% | |
| Services and construction without material procurement. | 2% | 5% | |
| Providing digital content products and services (entertainment, games, movies, photos, music, advertising, etc.) | 5% | 5% | |
| Rental of real estate (excluding accommodation businesses such as hotels, guesthouses, and homestays) | 5% | 5% | |
| Other sectors and fields | 1% | 2% |
Therefore, based on the business entity, type of activity, and ability to determine costs, different personal income tax and VAT rates will be applied. Correctly identifying the business group and revenue scale not only helps taxpayers accurately calculate their tax obligations but also minimizes the risk of errors, tax arrears, and penalties during tax audits and inspections.
Conclude
Understanding how to classify business entities, correctly determining tax calculation methods, and accurately applying personal income tax and VAT rates for each type of business are key factors in helping individuals, household businesses, and enterprises comply with tax laws, while proactively controlling costs and minimizing risks during the tax settlement process.
If you are still unsure about how to determine deductible revenue and expenses or choose the appropriate tax declaration method, consulting with MAN – Master Accountant Network – a professional tax consulting firm, will save you time, ensure accurate tax records, and give you greater peace of mind when dealing with tax authorities.
Contact information MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- Email: man@man.net.vn
Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
Source:
- Law on Personal Income Tax 2025 (Number: [Law number being updated]/2025/QH15).
- Resolution 110/2025/UBTVQH15 on personal allowance deductions.
- Circular 94/2025/TT-BTC provides guidance on the implementation of the Personal Income Tax Law.
- Circular 152/2025/TT-BTC on accounting books for household businesses.
MAN Editorial Board – Master Accountant Network
