Citizens complete taxation procedures in HCM City. — Photo thanhnien.vn

HÀ NỘI — 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 this year.

Under the amended Law on Personnal Income Tax, the personal deduction will rise to VNĐ15.5 million (US$590) per month from VNĐ11 million 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 per cent of assessable income, a single individual earning around VNĐ17 million per month will not pay PIT next year, saving approximately VNĐ210,000 per month compared to current rules. Each dependent will qualify for an additional deduction of VNĐ6.2 million per month, instead of VNĐ4.4 million, meaning a taxpayer with one dependent and an income of VNĐ24 million will also be exempt from PIT.

Higher earners will likewise benefit as Việt Nam’s tax structure shifts from seven to five progressive brackets with redesigned taxable thresholds. For example, a taxpayer earning VNĐ30 million per month with one dependent will only fall into the 5 per cent bracket instead of the current 15 per cent, reducing their monthly tax burden from VNĐ968,000 to VNĐ295,000. Someone earning VNĐ50 million per month with one dependent will now pay around VNĐ1.84 million instead of VNĐ4.3 million, while a person earning VNĐ100 million per month will see their PIT fall by more than VNĐ5.5 million to around VNĐ12.5 million.

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 VNĐ1 million 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 VNĐ6.2 million per month from next year, or at least allowing partial deductions proportional to actual support needs. — VNS