ADJUSTMENT OF PERSONAL DEDUCTIONS FOR PERSONAL INCOME TAX FROM 2026

So, what is personal deduction? Personal deduction is the amount deducted from the income of an individual who is a resident in Viet Nam before the calculation of personal income tax, in order to ensure that this portion of income is not subject to taxation, thereby helping taxpayers reduce financial pressure in their daily lives. In substance, the personal deduction policy reflects the principle of equity in taxation, aiming to support individuals who bear the obligation of ensuring their own livelihood as well as that of their dependents. Under the law, personal deduction consists of two components: a deduction for the taxpayer themself and a deduction for dependents, such as children, spouses, parents, and other persons as prescribed by law.

Under the current regulations, the 2025 Law on Personal Income Tax has increased the personal deduction for the taxpayer from VND 11 million to VND 15.5 million per month, and the deduction for each dependent from VND 4.4 million to VND 6.2 million per month.

Specifically, Article 10 of the 2025 Law on Personal Income Tax provides:

“1. Personal deduction means the amount deducted from taxable income prior to tax calculation with respect to income from salaries and wages of a taxpayer who is a resident individual. Personal deduction includes:
a) The deduction for the taxpayer in the amount of VND 15.5 million per month (VND 186 million per year);
b) The deduction for each dependent in the amount of VND 6.2 million per month.”

Under this provision, a person eligible for personal deduction must be an individual earning income from salaries or wages. This means that if income is derived from other sources such as business activities, property leasing, or investment, such income is not entitled to personal deduction. This approach demonstrates a preference for protecting wage earners, who have stable income but simultaneously bear significant pressure from daily living expenses and the responsibility of supporting dependents. For other types of income, due to their proactive nature in generation and flexibility in allocation, this deduction mechanism is not applied. Accordingly, where a resident individual in Viet Nam earns income from salaries or wages, such individual is entitled to a deduction of VND 15.5 million per month (equivalent to VND 186 million per year) from that income.

With respect to dependents, current law does not limit the number of dependents that may be registered for personal deduction. Accordingly, one resident individual may register personal deductions for multiple dependents; however, one dependent may only be counted once for deduction purposes in respect of one taxpayer within the same tax year. Specifically, where an individual has dependents falling within the cases prescribed at Point d, Clause 1, Article 9 of Circular No. 111/2013/TT-BTC, personal deduction shall apply, including:

“d) Dependents include:
d.1) Children, including biological children, legally adopted children, children born out of wedlock, stepchildren of the wife, and stepchildren of the husband, specifically:
d.1.1) Children under 18 years of age (calculated on a monthly basis);
d.1.2) Children aged 18 or over who are disabled and incapable of working;
d.1.3) Children who are studying in Viet Nam or abroad at the university, college, professional secondary education, or vocational training level, including children aged 18 or over attending general education (including the period from June to September of grade 12 while awaiting university entrance examination results), who have no income or whose average monthly income during the year from all sources does not exceed VND 1,000,000.
d.2) The spouse of the taxpayer who satisfies the conditions prescribed at Point đ, Clause 1 of this Article.
d.3) Biological parents; parents-in-law (father-in-law, mother-in-law); stepfather, stepmother; legally adopted parents of the taxpayer who satisfy the conditions prescribed at Point đ, Clause 1 of this Article.
d.4) Other individuals with no means of support whom the taxpayer is directly responsible for supporting and who satisfy the conditions prescribed at Point đ, Clause 1 of this Article, including:
d.4.1) Biological siblings of the taxpayer;
d.4.2) Paternal grandparents, maternal grandparents; paternal aunts and uncles, maternal aunts and uncles of the taxpayer;
d.4.3) Biological nieces and nephews of the taxpayer, including children of the taxpayer’s biological siblings;
d.4.4) Other persons whom the taxpayer is directly responsible for supporting in accordance with law.”

The individuals mentioned above shall only be regarded as dependents if they satisfy the following conditions:

“đ) Individuals eligible to be considered dependents under Sub-points d.2, d.3, and d.4, Point d, Clause 1 of this Article must satisfy the following conditions:
đ.1) For individuals of working age, the following conditions must be satisfied simultaneously:
đ.1.1) Being disabled and incapable of working;
đ.1.2) Having no income or having an average monthly income during the year from all sources not exceeding VND 1,000,000.
đ.2) For individuals beyond working age, having no income or having an average monthly income during the year from all sources not exceeding VND 1,000,000.
e) Disabled persons or persons incapable of working as referred to in Sub-point đ.1.1, Point đ, Clause 1 of this Article are those falling within the scope of application of the law on persons with disabilities or persons suffering from diseases that render them incapable of working (such as AIDS, cancer, chronic renal failure, etc.).”

Accordingly, dependents of a resident individual in Viet Nam include children, spouses, parents, and other individuals as prescribed above, provided that they fully satisfy the statutory criteria regarding age, working capacity, and income level.

Where a dependent is of working age (from 15 years of age or older) but is disabled, incapable of working, and has no income or an average income not exceeding VND 1 million per month, personal deduction shall apply. Where a dependent is beyond working age (under 15 years of age or within the statutory retirement age under current State regulations), such dependent must have no income or have an average income not exceeding VND 1 million per month in order to qualify for personal deduction.

Therefore, where a resident individual falls within the scope of application of personal deduction and concurrently has dependents who fully meet the conditions prescribed by law, such individual shall be entitled to personal deductions for both themself and their dependents when determining taxable personal income.

From the above analysis, it can be seen that the adjustment increasing personal deduction levels from 2026 has clear practical significance for taxpayers, particularly low- and middle-income earners. This policy significantly reduces, and in many cases eliminates, personal income tax obligations, thereby ensuring that income at a level sufficient to cover basic daily living needs is not subject to taxation. For workers with relatively moderate income or with dependents, the new personal deduction levels substantially reduce the amount of tax payable, creating conditions for increasing actual income and improving quality of life. Overall, the increase in personal deductions not only demonstrates the regulatory role of personal income tax in a fair and reasonable manner, but also affirms the social security function of tax policy in the context of rising living costs.