Vietnam’s Personal Income Tax (PIT) law is set for a major overhaul, with key changes taking effect on July 1, 2026.
Simplified Tax Brackets and Increased Deductions
One of the most significant changes is the reduction of progressive tax brackets from seven to five, with a top rate of 35 percent. This adjustment aims to simplify filing and enhance transparency. The law increases personal deductions from VND 11 million ($418) to VND 15.5 million ($589) per month and dependent deductions from VND 4.4 million ($167) to VND 6.2 million ($236) per month.
These changes mean that individuals without dependents earning up to VND 17 million ($646) per month will not be subject to PIT. Individuals with one dependent will remain tax-exempt at an income level of VND 24 million ($912) per month, and those with two dependents at VND 31 million ($1,178) per month.
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Tax Policy for Household Businesses and Gold Transactions
The new law raises the revenue threshold for tax exemption for household businesses from VND 100 million ($3,798) to VND 500 million ($18,989) per year. Household businesses with annual revenue of VND 500 million or less will be exempt from personal income tax. The law imposes a PIT on income derived from the transfer of gold bars, at a rate of 0.1 percent of the transaction value. Individuals trading gold for savings or long-term holding purposes below a specified threshold will not be subject to PIT.
Vietnam is expanding its tax exemptions to encourage labor participation and innovation. This includes a full PIT exemption on income from night work and overtime, as well as a five-year tax exemption for high-tech professionals and digital technology industry workers.
The law introduces new deductible categories for education, training, and healthcare expenses, allowing taxpayers to deduct these costs before calculating taxable income. This aims to encourage investment in learning and skills development, while also supporting financial resilience in cases of illness.
Digital Reporting and Administrative Modernization
Vietnam’s tax authorities plan to strengthen reporting, e-filing, and cross-platform information sharing to capture digital incomes. These proposals aim to modernize tax administration and ensure compliance in the fast-growing online economy.
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Online marketplaces, gig platforms, and marketplace sellers will face new reporting obligations. Companies operating or aggregating payments should prepare for enhanced data collection and reporting workflows, and consider revising merchant contracts to allocate tax compliance responsibilities.
Strategic and Tax Planning Considerations
Businesses should review salary structures and benefits packaging to ensure tax efficiency. With broader definitions of taxable income and potentially higher top rates, firms may need to restructure remuneration to balance employer costs with employee after-tax outcomes.
Tax Adjustments and Incentives for Economic Growth
The 2025 PIT Law requires the Government to promptly submit adjustment proposals to modify family circumstance deductions in response to changes in prices and incomes. The current law authorizes the Standing Committee of the National Assembly to revise deductions only when the Consumer Price Index (CPI) fluctuates by more than 20 percent. However, this threshold has become inadequate amid faster changes in living costs and income levels. To address this, the new law ensures timely and practical alignment with economic realities.
