Several major labor-related policies are set to take effect on January 1, 2026. These include increases in regional minimum wages, reductions in personal income tax, and revised compensation schemes for healthcare workers and teachers.

Minimum wage adjustments by region

Under Government Decree No. 293/2025, monthly and hourly minimum wages for workers under labor contracts will increase across all four wage zones starting January 1, 2026.

Zone 1: USD 215/month and USD 1.03/hour, up USD 14/month from the previous rate.
Zone 2: USD 191/month and USD 0.92/hour, up USD 13.
Zone 3: USD 167/month and USD 0.81/hour, up USD 11.
Zone 4: USD 149/month and USD 0.72/hour, up USD 10.

These rates apply to all contractual employees and employers as defined by the Labor Code, including enterprises, agencies, organizations, cooperatives, households, and individuals employing labor.

Revised compensation for healthcare and education sectors

At its 10th session, the National Assembly passed a resolution introducing breakthrough mechanisms for public healthcare. It includes a specific provision on salary and allowances for healthcare personnel.

Accordingly, medical doctors - including traditional medicine practitioners, dental surgeons, and preventive health specialists - as well as pharmacists will be placed at grade 2 on the salary scale upon recruitment, until a new wage system is introduced.

Healthcare workers engaged directly and regularly in high-risk specialties such as psychiatry, forensic medicine, emergency care, or pathology will receive a 100% professional allowance.

Healthcare personnel working directly at commune-level health stations or preventive health units in ethnic minority or mountainous regions, economically disadvantaged areas, border regions, and islands will also receive a 100% allowance. Those in other regions will be entitled to at least 70%.

During the 9th session, the 2025 Law on Teachers was passed, introducing notable incentives for educators.

Teachers will receive the highest salary ranking among public sector roles. They will also receive professional and regional allowances based on their job characteristics and location, as stipulated by law.

This includes kindergarten teachers; teachers working in ethnic minority and mountainous areas, border regions, islands, and extremely difficult socio-economic zones; teachers at specialized institutions; inclusive education practitioners; and educators in specialized vocational fields. These groups will enjoy higher salaries and allowances compared to those in regular settings.

Teachers at non-public institutions will follow labor law provisions regarding salaries. Where a teaching position qualifies for multiple special regimes, only the highest allowance will apply.

Unemployment insurance policy overhaul

The revised 2025 Employment Law, effective from January 1, 2026, introduces key changes that affect both workers and employers.

Employees will contribute a maximum of 1% of their monthly salary to the unemployment insurance fund. Employers will contribute up to 1% of their total payroll for insured employees. The government will also support up to 1% of the wage fund.

Monthly unemployment benefits will equal 60% of the average salary from the most recent six months of insurance contributions prior to employment termination. The maximum benefit will not exceed five times the regional minimum monthly wage at the time of the last insurance payment.

This new policy eliminates the current distinction between public and private sector workers, applying the same maximum benefit across all employee groups.

No personal income tax for earners of up to USD 680/month

The amended Law on Personal Income Tax, which takes effect on July 1, 2026, introduces significant adjustments to relieve the tax burden on tens of millions of salary and wage earners.

Notably, provisions concerning income from business activities or wages and salaries for resident individuals will apply retroactively to the 2026 tax year, beginning January 1, 2026.

A key highlight of the amendment is the increase in personal and dependent deductions.

The standard deduction for taxpayers rises from VND 11 million to VND 15.5 million/month (USD 435 to USD 613), or USD 7,356/year. The deduction for each dependent rises from VND 4 million to VND 6.2 million/month (USD 157 to USD 245).

With the new deduction levels, a single taxpayer earning up to USD 680/month (after mandatory insurance contributions) will be exempt from personal income tax beginning in 2026.

The amended law also expands deductible categories, including donations to charity and humanitarian causes, as well as educational and healthcare expenses for both taxpayers and their dependents.

These deductible expenses must be documented with valid invoices and must not have been reimbursed by other sources.

Tran Thuong