The National Assembly Standing Committee resolved deduction levels for taxpayers at VND15.5 million/month (VND186 million/year) and for each dependent at VND6.2 million/month.

This resolution takes effect from the signing date and applies from the 2026 tax period.

Before the resolution was passed, Nguyen Duc Chi, Deputy Minister of Finance, presenting the draft proposal, noted that the current deduction level has been in place since 2020, so it was necessary to review and adjust it to better reflect current conditions.

The Ministry of Finance (MOF) proposed two options for adjusting the deduction level:

Option 1: adjust according to the CPI growth rate

According to the Statistics Office, the cumulative CPI from 2020 to the end of 2025 is expected to increase by 21.24 percent. Based on this rate, the deduction could be adjusted as follows:

Deduction for the taxpayer: raised from VND11 million/month to VND13.3 million/month (an increase of 21.24 percent).

Deduction for each dependent: raised from VND4.4 million/month to VND5.3 million/month (an increase of 21.24 percent).

With this option, the state budget would decrease by VND12,000 billion/year compared to current revenue levels.

Option 2: adjust according to the growth of per capita income 

According to the Statistics Office, the average per capita income from 2020 to the present have increased by about 40–42 percent. Based on this, the deduction levels could be adjusted as follows:

Deduction for the taxpayer: raised from VND11 million/month to VND15.5 million/month (an increase of 40.9 percent).

Deduction for each dependent: from VND4.4 million/month to VND6.2 million/month (an increase of 40.9 percent).

With this option: A taxpayer with no dependents earning VND17 million/month would have insurance deductions of 10.5 percent (8 percent social insurance + 1.5 percent health insurance + 1 percent unemployment insurance), which equals VND1.785 million (VND17 million x 10.5 percent). Adding the personal deduction of VND15.5 million results in a total deduction of VND17.285 million. Therefore, this individual would not be subject to tax, as only income exceeding VND17.285 million/month would be taxable, starting at a 5 percent rate.

A taxpayer with one dependent earning VND24 million/month would have insurance deductions of VND2.52 million (10.5 percent x VND24 million), plus VND15.5 million (personal deduction) and VND6.2 million (deduction for one dependent), totaling VND24.22 million. Hence, no tax would be due on VND24 million/month.

A taxpayer with two dependents earning VND31 million/month would have insurance deductions of VND3.255 million (10.5 percent x VND31 million), plus VND15.5 million (personal deduction) and VND12.4 million (two dependents at VND6.2 million each), totaling VND31.155 million. As such, this individual would not be liable for tax on a VND31 million/month income.

The Ministry of Finance (MOF) estimates that under this option, the state budget would decrease by about VND21,000 billion/year compared to current levels.

According to the 2024 household living standards survey published by the Statistics Office, Vietnam’s average per capita monthly income in 2024 (at current prices) is VND5.4 million. The highest income group (the top 20 percent) earns an average of VND11.8 million/month/person.

Thus, the deduction for taxpayers under option 2 (VND15.5 million/month) is nearly 3 times higher than the national average income, and significantly above the range (0.5 to 1 times average income) applied in many countries. It also exceeds the average income of the top 20 percent income group. Similarly, the dependent deduction under option 2 (VND6.2 million/month) is higher than the national average income of VND5.4 million/month.

MOF stated that raising the deduction levels as proposed would ease the tax burden for individuals in the context of rising prices and inflation since 2020. Everyone would pay less tax, with those in the lower tax brackets benefiting the most in terms of tax reduction relative to income.

If the new higher deduction levels are applied, all current taxpayers, based on existing tax brackets and registered dependents, would see a reduction in their personal income tax liabilities. The more dependents a person has, the more their tax is reduced.

However, the adjustment must be carefully studied to align with changes in the cost of living and household income levels, both current and projected. At the same time, it must not undermine the role of personal income tax policy within the broader tax system.

Based on feedback received, most opinions favored option 2. Therefore, the government submitted to the National Assembly Standing Committee a proposal to increase the personal deduction from VND11 million/month to VND15.5 million/month, and the dependent deduction from VND4.4 million/month to VND6.2 million/month.

Nguyen Le