In just a few days, millions of Vietnamese taxpayers will begin to enjoy reduced financial pressure as new personal income tax (PIT) regulations, featuring higher deductions and a revised progressive tax bracket, take effect from January 1, 2026.

Citizens complete taxation procedures in Ho Chi Minh City.

Under the amended Law on Personnal Income Tax, the personal deduction will rise to 15.5 million VND (590 USD) per month from 11 million VND at present. Taxpayers are also entitled to mandatory insurance deductions and contributions to charity and humanitarian funds.

With compulsory insurance contributions currently equivalent to 10.5% of assessable income, a single individual earning around 17 million VND per month will not pay PIT next year, saving approximately 210,000 VND per month compared to current rules.

Each dependent will qualify for an additional deduction of 6.2 million VND per month, instead of 4.4 million VND, meaning a taxpayer with one dependent and an income of 24 million VND will also be exempt from PIT.

Higher earners will likewise benefit as Vietnam’s tax structure shifts from seven to five progressive brackets with redesigned taxable thresholds.

For example, a taxpayer earning 30 million VND per month with one dependent will only fall into the 5% bracket instead of the current 15%, reducing their monthly tax burden from 968,000 VND to 295,000 VND.

Someone earning 50 million VND per month with one dependent will now pay around 1.84 million VND instead of 4.3 million VND, while a person earning 100 million VND per month will see their PIT fall by more than 5.5 million VND to around 12.5 million VND.

Experts also highlight a major policy innovation. For the first time, taxpayers will be permitted to deduct eligible healthcare and education expenses for themselves and their dependents, once the Government issues detailed guidance.

They argue this represents an important human-centred reform, easing essential cost burdens while promoting social investment in health and education.

Several legal and financial experts suggest allowing full deduction of legitimate medical expenses for serious illnesses, alongside reasonable caps for general healthcare and education spending to ensure fairness and administrative feasibility.

At the same time, many hope the Government will modernise policies relating to dependents. Currently, an individual is only recognised as a dependent if their income does not exceed 1 million VND per month - a level widely viewed as outdated and unrealistic given rising living costs and increasing minimum wages.

Legal experts recommend increasing this threshold to align with the dependent deduction of 6.2 million VND per month from 2026, or at least allowing partial deductions proportional to actual support needs.

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