The Ministry of Finance has proposed increasing the personal income tax allowance from 11 million VND to 15.5 million VND per month for taxpayers and from 4.4 million VND to 6.2 million VND for dependents. This proposed increase is based on the growth of average per capita income, which has seen a 40-42% increase since 2020.

The draft resolution, which will be reviewed by the National Assembly Standing Committee, would be applicable for the 2026 tax year if approved. This means taxpayers would file for these deductions in early 2027.

However, many believe the implementation timeline needs reconsideration.

The current personal allowance for taxpayers is 11 million VND, with an additional 4.4 million VND for each dependent. This has been in effect since July 2020. Taxable income is calculated after deductions for insurance, family allowances, and other benefits.

Nguyen Van Duoc, general director of Trong Tin Accounting and Tax Consulting Co., Ltd., told VnExpress that the current allowances are outdated and the adjustment is overdue. "Delaying the implementation until the 2026 tax year puts taxpayers at a significant disadvantage," he said.

Workers at Dony Garment Company (Vinh Loc A commune, TP HCM), 8/2025. Photo: Quynh Tran

Sharing this view, Phan Huu Nghi, associate professor and deputy director of the Banking and Finance Institute at the National Economics University, recommends implementing the new deductions "as soon as possible" given rising prices and the Vietnamese dong's devaluation.

He noted the USD has risen to approximately 26,000 VND from 23,000 VND at the beginning of the year, even as the USD index has fallen against other currencies. "This indicates the dong is losing value. While reported inflation remains below double digits, market prices for many goods have fluctuated significantly," he said.

Several National Assembly delegations have also urged the Ministry of Finance to implement the new allowances immediately. The Quang Tri delegation argued that implementing the new deductions in 2026 is inappropriate as the personal income tax filing deadline hasn't passed yet. Furthermore, they pointed out that the lack of adjustment since 2020 means the current allowances no longer reflect the basic cost of living, creating numerous difficulties.

"Implementing the new deductions for the 2025 tax year is necessary. It demonstrates the government's responsiveness, stimulates consumer spending, and boosts economic growth," the delegates stated.

Similarly, delegates from Cao Bang province urged against waiting until 2026, arguing that such a delay would cause "policy to lag behind reality, disadvantaging taxpayers." They believe this would be a timely support measure for salaried workers.

The Hanoi delegation warned that if the new rates aren't applied until 2026, "taxpayers will face at least another tax year with outdated deductions." Gia Lai province delegates called the Ministry of Finance's proposed timeline "unreasonable," noting that even if the National Assembly Standing Committee approves the changes, it will be several months before the 2025 tax filing deadline.

In response, the Ministry of Finance explained that applying the new rates from the following tax year aligns with the Personal Income Tax Law. The law stipulates that when the consumer price index (CPI) fluctuates by more than 20% from the law's effective date or the last adjustment, the government must propose adjustments to the National Assembly Standing Committee for implementation in the subsequent tax year.

Nguyen Van Duoc argued that the government can apply retroactive policies in cases affecting social security, livelihoods, and the economy. Therefore, applying the new allowances in the 2025 tax year would comply with the 2015 Law on Promulgation of Legal Documents.

Furthermore, he added that since the tax filing deadline for the 2025 tax year is in 2026, implementing the new allowances would not increase administrative procedures or social costs, while fostering consensus.

If the new allowances aren't implemented for the 2025 tax year, Phan Huu Nghi suggests the government could consider exempting taxpayers from the first tax bracket. This would effectively increase the allowance by 5 million VND for workers.

"The government has various technical methods available; the key is to find a harmonious combination," he added.

Beyond the implementation timeline, many experts and local authorities believe the personal allowance should be raised to 16-20 million VND per month.

The Dien Bien province delegation suggested 20 million VND (equivalent to 240 million VND annually) for taxpayers and 10 million VND for dependents. They believe this would ensure fairness, support revenue generation, help citizens cope with rising living costs, and encourage voluntary tax declaration and payment.

The CPI increase from 2021-2025 could reach 21.24%, justifying an adjustment to the allowances. However, the TP HCM delegation noted that Vietnam's CPI basket includes 752 items, including essentials like food, beverages, housing, education, transportation, and healthcare. They argued that actual living costs are more closely tied to a smaller group of essential goods, which have seen significant price increases over the past five years: rice by nearly 40%, pork by over 60%, and apartments by more than 50%. They propose a 50% increase in the personal allowance to 16.5 million VND and 6.6 million VND for dependents.

Also supporting a 20 million VND allowance, Phan Huu Nghi explained that statistics show the 18-23 million VND monthly income bracket represents the largest segment of the workforce. Therefore, the taxable income threshold should be adjusted to 20-25 million VND to accurately reflect income realities and avoid overtaxing the middle class. This level would also provide stability, preventing the new allowances from becoming quickly outdated.

Phuong Dung - Quynh Trang