Vietnam’s tax landscape is changing. The National Assembly Standing Committee has officially approved a substantial increase to the Personal Income Tax (PIT) deductions. This adjustment is effective from the 2026 tax period. This landmark decision provides significant financial relief for millions of salaried workers. It marks the first adjustment to the deduction levels since 2020. Understanding this change is vital for businesses managing payroll and compliance in Vietnam.
New PIT Deduction Levels: A Major 40%+ Increase
The approved resolution introduces a major increase of over 40% compared to the current rates. This reflects economic growth and rising living costs. The Vietnam PIT Deduction 2026 significantly boosts net take-home pay for employees.
| Deduction Category | Old Monthly Rate (Since 2020) (VND) | New Monthly Rate (From 2026) (VND) | Annual Deduction (VND) |
| For the Taxpayer (Self-Deduction) | 11,000,000 | 15,500,000 | 186,000,000 |
| For Each Dependent | 4,400,000 | 6,200,000 | 74,400,000 |
When Does This Apply?
This new resolution is effective from the date of signing. It applies starting from the 2026 tax period. The tax finalization under these new rates will occur in March 2027.
How the Vietnam PIT Deduction 2026 Affects Taxable Income
The increased deduction amounts directly raise the income threshold at which an individual begins paying Personal Income Tax (PIT).
To determine the tax-free threshold, we add the new deductions to the mandatory insurance contributions (Social, Health, and Unemployment Insurance, typically totaling 10.5% of salary). If the employee’s gross monthly income is less than or equal to this total, they pay zero PIT.
Here are three simple examples illustrating the new tax-free thresholds based on the Vietnam PIT Deduction 2026:
Example 1: Taxpayer with No Dependents
For an employee with a gross salary of VND 17,000,000 per month and no dependents. This employee will be tax-exempt on gross income up to VND 17,285,000 per month.
| Calculation | Detail | Amount (VND) |
| A. Mandatory Insurance (10.5%) | VND 17,000,000*10.5% | 1,785,000 |
| B. Self-Deduction (New Rate) | (Fixed Rate) | 15,500,000 |
| Total Deducted Amount (A + B) | 17,285,000 |
Conclusion: Since the total deductible amount (VND 17,285,000) exceeds the gross salary (VND 17,000,000), the taxable income is less than zero. The employee will have zero PIT liability.
Example 2: Taxpayer with One Dependent
For an employee with a gross salary of VND 24,000,000 per month and one dependent. This employee will be tax-exempt on gross income up to VND 24,220,000 per month.
| Calculation | Detail | Amount (VND) |
| A. Mandatory Insurance (10.5%) | 24,000,000*10.5% | 2,520,000 |
| B. Self-Deduction (New Rate) | (Fixed Rate) | 15,500,000 |
| C. Dependent Deduction (New Rate) | (Fixed Rate) | 6,200,000 |
| Total Deducted Amount (A + B + C) | 24,220,000 |
Conclusion: Since the total deductible amount (VND 24,220,000) exceeds the gross salary (VND 24,000,000), the taxable income is less than zero. The employee will have zero PIT liability.
Example 3: Taxpayer with Two Dependents
For an employee with a gross salary of VND 31,000,000 per month and two dependents. This employee will be tax-exempt on gross income up to VND 31,155,000 per month.
| Calculation | Detail | Amount (VND) |
| A. Mandatory Insurance (10.5%) | $31,000,000*10.5% | 3,255,000 |
| B. Self-Deduction (New Rate) | (Fixed Rate) | 15,500,000 |
| C. Dependent Deduction (New Rate) | $6,200,000*2 | 12,400,000 |
| Total Deducted Amount (A + B + C) | 31,155,000 |
Conclusion: Since the total deductible amount (VND 31,155,000) exceeds the gross salary (VND 31,000,000), the taxable income is less than zero. The employee will have zero PIT liability.
Action Steps for HR and Payroll Teams
This change is critical for compliance. HR and Payroll managers must update their systems to reflect the new deduction amounts (VND 15.5M and VND 6.2M) before the start of the 2026 tax period (January 2026). This proactive approach ensures employees receive the full benefit of the new Vietnam PIT Deduction 2026 and avoids potential payroll and tax finalization errors.
NetViet offers comprehensive HR solutions for businesses entering or expanding in the Vietnamese market. Established in 2000, NetViet provides expert, seamless, and compliant HR solutions.
Legal Disclaimer: The information provided is for general informational purposes only and does not constitute legal advice. For specific legal advice on compliance in Vietnam, schedule a consultation with NetViet or consult legal counsel.
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