News
On the morning of October 17, all members present at the Standing Committee of the National Assembly voted to approve the resolution adjusting the personal income tax (PIT) family circumstance deduction.
Accordingly, the deduction for taxpayers increases from VND 11 million to VND 15.5 million per month (equivalent to VND 186 million per year).
The deduction for each dependent increases from VND 4.4 million to VND 6.2 million per month.
The resolution takes effect from the 2026 tax period, with finalization conducted in Q1/2027, creating a significant financial buffer for households and workers.
The adjustment is based on macroeconomic indicators for the 2020–2025 period.
CPI accumulated by the end of 2025 is projected to fluctuate around 21.24%, while average income per capita and GDP per capita increased approximately 40–42%.
Therefore, the option of adjusting according to income/GDP per capita was selected as it more accurately reflects actual price levels, spending, and income.
The policy aims to ensure a reasonable tax burden, increase disposable income, support household consumption, and promote economic growth.
For ease of application, below are three quick examples after deducting mandatory insurance of 10.5% (8% social insurance + 1.5% health insurance + 1% unemployment insurance):
Income: VND 17 million/month
→ Mandatory insurance (1.785 million) + taxpayer deduction (15.5 million) = 17.285 million
→ Income of 17 million is not subject to PIT (only the excess above 17.285 million is taxable at 5%).
Income: VND 24 million/month
→ Insurance (2.52 million) + taxpayer deduction (15.5 million) + dependent (6.2 million) = 24.22 million
→ Income of 24 million is not subject to PIT.
Income: VND 31 million/month
→ Insurance (3.255 million) + taxpayer deduction (15.5 million) + dependents (12.4 million) = 31.155 million
→ Income of 31 million is not subject to PIT.
The new thresholds clearly benefit employees, especially those with dependents.
Compared to the previous deduction (11 million / 4.4 million), the over 40% increase significantly reduces tax payable or expands the tax-exempt range.
According to estimates, adjusting the deduction based on income/GDP per capita is expected to reduce state budget revenue by approximately VND 21,000 billion per year (compared to about VND 12,000 billion if adjusted only by CPI).
Despite short-term revenue reduction, the Government considers this a necessary move to support taxpayers amid rising living costs.
The policy is also expected to stimulate consumption, increase purchasing power, and create positive spillover effects for economic growth and medium-term revenue recovery.
First, update payroll systems to apply the new deductions, and review insurance and withholding calculations.
Second, standardize dependent documentation (new registrations, adjustments, removals) and guide employees on timely submissions.
Third, conduct internal communication about the new tax thresholds and simulate net income based on the number of dependents.
Fourth, prepare forms and workflows for 2026 tax finalization (carried out in Q1/2027) to minimize errors.
Fifth, coordinate with independent tax advisors to optimize compliance and entitlements.
Taxpayers should review their dependents and prepare supporting documents early to register deductions on time.
They should also keep records of withholdings, insurance payments, charitable donations, loan interest, etc., to optimize final tax calculations.
Individuals with multiple income sources should prepare an income summary starting from 2025 to estimate potential tax obligations or refunds.
Finally, stay updated on detailed guidance from the tax authority regarding forms applicable to the 2026 tax period to avoid errors.
New Resolution of the Standing Committee of the National Assembly dated October 17 on adjusting family circumstance deductions:
VND 15.5 million/month (taxpayer) and VND 6.2 million/month (each dependent), effective from the 2026 tax period.
GIVLAW provides comprehensive PIT consulting services, including dependent registration/adjustment, withholding review, net-income simulations, payroll compliance, and tax-authority representation.
We are committed to lawful, optimized, and effective solutions, ensuring clients fully benefit from the new policy with complete peace of mind.
