Vietnam PIT Law 2026: 15 Priority Actions for HR

Jan 07, 2026

Blog, HR & Payroll, HR Insights

Navigating the 2026 Vietnam PIT Reform: A Strategic Guide for HR

The landscape of Personal Income Tax (PIT) in Vietnam is undergoing its most significant transformation in over a decade. With the National Assembly’s final approval of the amended PIT Law, 2026 marks a turning point for how businesses structure compensation and how employees perceive their value. For HR leaders and payroll managers, this is more than just a software update—it is a strategic shift in talent retention and financial compliance. Here is your roadmap to the Vietnam PIT changes.

Table of Contents

Key Changes: What’s New in 2026?

The 2026 reform aligns tax policy with rising living costs, significantly reducing the tax burden for middle-income earners and high-tech talent.

Higher Deduction Thresholds

Effective January 1, 2026, deductions have increased by approximately 40%:

Personal Deduction: VND 15.5 million/month.
Dependent Deduction: VND 6.2 million/month per dependent.

Streamlined 5-Bracket System

Vietnam has simplified the progressive tax schedule from 7 brackets to 5, widening the income ranges to prevent bracket creep.

Monthly Taxable Income (VND)	Tax Rate
Up to 10 million	5%
Over 10 – 30 million	15%
Over 30 – 60 million	25%
Over 60 – 100 million	30%
Above 100 million	35%

15 Priority Actions for HR Teams

Based on the latest legislative updates, HR must lead the transition across five critical pillars:

Strategy and Budget

Recalculate Net Take-Home Pay: Simulate income before and after 2026 for different salary groups.
Review Total Rewards Architecture: Categorize taxable vs. non-taxable items and optimize the mix of Short-Term and Long-Term Incentives.
Redesign Pay Mix: Rebalance cash and non-cash benefits to legally optimize tax outcomes.
Report Budget Impact: Present the impact on payroll costs and talent retention to the Board of Directors.

Systems & Operations

Update Payroll Software: Implement the new 5-bracket logic and deduction levels immediately.
Data Standardization: Ensure HR and Finance use a single “source of truth” for income and benefit data.
Establish Finalization Processes: Define clear protocols for tax refunds or additional collections.

Compliance & Legal

Audit Labor Contracts: Review Gross/Net clauses to clarify who benefits from the lower tax rates—the employer or the employee.
Standardize Allowance Policies: Identify housing or insurance items that can be reclassified as non-taxable.
Timing of Bonuses: Evaluate how the timing of incentive payments affects the tax year.
Manage Expat Residency: Carefully track travel days and residency status for foreign experts.
Contractor Classification: Ensure collaborators are not misclassified to avoid high-risk tax “bypassing”.

People & Communication

Transparent Internal Comms: Launch FAQ campaigns to explain why net pay has changed.
Train HR Business Partners: Empower HRBPs to answer technical questions from line managers and staff.