After several amendments to the Personal Income Tax Law, the family-circumstance deduction is now VND11 million per month (VND132 million per year) for taxpayers and VND4.4 million per month for each dependent (effective from the 2020 tax year).

On October 17, the National Assembly Standing Committee approved a resolution adjusting PIT deductions. Accordingly, the deduction for taxpayers has been raised from VND11 million per month to VND15.5 million per month, and for each dependent from VND4.4 million to VND6.2 million per month.

According to the 2024 living standards survey report by the Statistics Office, Vietnam's average per capita income/month in 2024 (at current prices) was VND5.4 million and the highest income group (20 percent richest population - Group 5) had an average income of VND11.8 million/month/person.

Accordingly, the taxpayer deduction of VND15.5 million/month is nearly three times the average per capita income (much higher than the common level applied by countries from 0.5 to 1 time); also higher than the average income of the 20 percent highest income population group. The dependent deduction of VND6.2 million/month is higher than the 2024 average per capita income (VND5.4 million/person/month).

The new deduction will take effect when the resolution becomes valid, applicable from the 2026 tax year, meaning final tax settlement in 2027.

Nguyen Ngoc Tu, a lecturer at Hanoi University of Business and Technology, said the VND15.5 million family-circumstance deduction doesn’t fully meet taxpayer expectations, but it is more realistic than before.

According to Tu, previously, family-circumstance reductions were adjusted based on the consumer price index (CPI) and usually increased by about 20 percent. This time, the Ministry of Finance, the tax law compiler, considered more factors such as GDP growth and average per capita income when designing tax rates, so the deduction has increased by about 40 percent compared to before.

"The VND15.5 million family reduction is suitable for the 2025 tax period. However, in the context of the economy expected to grow strongly, possibly over 10 percent in 2026, this level will become outdated and unreasonable if it is not adjusted," Tu said.

He believes that deductions should be reviewed more frequently to reflect real economic and social changes.

“The current Personal Income Tax Law should require adjustments every three years, or authorize the government to make timely changes so that deduction levels do not stagnate, preventing disadvantages for taxpayers,” Tu suggested.

Nguyen Ngoc Tinh, Vice Chair of the HCMC Tax Consulting and Agency Association, also said that the current VND15.5 million monthly deduction is already outdated, especially since it will only apply to the 2026 tax year, meaning final settlement in 2027.

Given potential fluctuations in living costs and inflation, Tinh proposed increasing the deduction to VND18 million per month for taxpayers.

Family-circumstance deductions 

Regarding the planned deduction of VND6.2 million per dependent, Tu said the amount is still low because this is the deduction for people the taxpayer has the obligation to support, while actual costs for dependents such as elderly parents or school-age children are currently very high.

"To ensure people's lives, the dependent deduction should be raised to at least 50 percent of the individual taxpayer deduction, VND8 million," Tu said.

Nguyen Ngoc Tinh said that after the Personal Income Tax Law is amended and allows deduction of education and medical expenses, the dependent family allowance also needs to be raised. 

For the immediate time, he recommended raising to 50 percent of the taxpayer’s deduction, equivalent to VND9 million/month/person. Later, the deduction should be raised to 100 percent.

The expert also stressed that the new deductions should be applied from this year, or they will become out of date before the validity time.

Tinh explained that if stipulated for the 2026 tax period, taxpayers must wait until March 2027 for settlement. While March-April 2026 is the deadline for 2025 tax settlement, there is a basis for early application to meet taxpayer expectations.

Taxes collected from salaried employees account for a large proportion of total personal income tax revenue and have continued to rise in recent years. Therefore, the government should promptly apply the new personal deduction level to encourage and motivate workers in businesses and organizations, he said.

Nguyen Le