Vietnam’s Personal Income Tax (PIT) Law is undergoing a comprehensive review, with key amendments proposed to make the tax regime fairer, more transparent, and better aligned with citizens’ actual income levels. These changes aim not only to update the taxable income framework but also to broaden tax exemptions, deductions, and clarify taxable categories, reflecting Vietnam’s evolving economic and social landscape.
Clearer Rules on Taxable Income Categories
One of the most significant updates lies in the classification and calculation of tax for different income types. The draft law distinguishes more clearly between income from salaries and wages, business operations, real estate transfers, and securities trading (including derivatives).
For instance, in the case of property transfers, the draft specifies more precise rules on when income is recognized and the applicable tax period.
Expanded Tax Exemptions
The proposed law also broadens the scope of tax-exempt income. In addition to the current exemptions, the new draft adds exemptions for income from voluntary pension funds, supplementary retirement insurance, and employees working in certain international organizations or specialized projects, income of enterprise sole owner already subject to corporate income tax, first-time transfers of carbon credits, income from “green bonds,” and income of experts, scientists, and founders of innovative start-ups during their initial years.
Adjusted Family Circumstance Deductions
The draft proposes an increase in personal and dependent deductions to better match current living costs and inflation.
On 17 October 2025, the Standing Committee of the National Assembly approved a Resolution on the adjustment of the family circumstance-based deduction under the PIT regime. Accordingly, the deduction for the taxpayer themself is increased from VND 11 million per month to VND 15.5 million per month, and the deduction for each dependent is increased from VND 4.4 million per month to VND 6.2 million per month.
The new deduction levels will take effect from the date the Resolution becomes effective and will be applied from the 2026 tax year. Therefore, individuals will be entitled to apply the new family circumstance-based deduction starting from January 2026.
Charitable and humanitarian contributions that meet stricter transparency and documentation conditions may also be deducted from taxable income.
Revised Progressive Tax Rates
For resident individuals earning income from wages and salaries, the progressive tax brackets will be adjusted to reflect a more realistic income distribution.
The proposed tax brackets will be as follows:
| Bracket | Taxable Income per Year (million VND) | Taxable Income per Month (million VND) | Tax Rate (%) |
| 1 | Up to 120 | Up to 10 | 5 |
| 2 | Over 120 to 360 | Over 10 to 30 | 15 |
| 3 | Over 360 to 720 | Over 30 to 60 | 25 |
| 4 | Over 720 to 1,200 | Over 60 to 100 | 30 |
| 5 | Over 1,200 | Over 100 | 35 |
Adjusted PIT on income from business activities
The new draft introduces significant changes to personal income tax on business income compared to the PIT Law 2007. Under the PIT Law 2007, all individuals with taxable business income were subject to PIT regardless of their revenue. The new draft, however, exempts individuals with annual revenue of 200 million VND or less from tax obligations. It also introduces clearer tax brackets for those with revenue between 200 million and 3 billion VND. The draft proposes the tax rate of 17% on taxable business income for individuals with annual business income from 3 billion to less than 50 billion VND and 20% for over 50 billion VND.
Conclusion
Although still at the draft stage, the major proposed amendments to Vietnam’s PIT Law send a clear signal of reform: enhancing fairness, promoting compliance, and encouraging innovation and sustainable growth.
Once enacted, these changes are expected to create a more transparent and balanced tax environment that better reflects Vietnam’s socio-economic realities and development goals.
