On the morning of 10/12, the national assembly approved the amended personal income tax law with over 92% of deputies in favor.

Effective 1/7/2026, the progressive personal income tax schedule will be reduced from seven to five brackets, with wider income ranges between each bracket. The lowest tax rate, 5%, will apply to incomes up to 10 million VND per month. The highest tax rate remains 35% for incomes exceeding 100 million VND, an increase from the current 80 million VND threshold.

Previously, Minister of Finance Nguyen Van Thang, in his explanatory report, stated that this new tax schedule helps reduce the payable amount for all individuals. It also addresses the issue of sharp tax increases between brackets, which is a current concern.

Regarding the highest tax rate of 35%, a government report indicates this is an average rate compared to other countries globally. Several regional nations, including Thailand, Indonesia, and the Philippines, also apply a top personal income tax bracket of 35%, while China's is 45%. The government stated that adjusting the 35% rate down to 30%, as some previous proposals suggested, would be perceived as a tax reduction policy for the wealthy.

Concerning personal and dependent deductions, the national assembly has authorized the government to adjust these amounts based on fluctuations in prices and income. According to a resolution passed by the Standing Committee of the National Assembly on 17/10, the personal deduction for taxpayers will increase to 15,5 million VND per month (a 4,5 million VND increase), and the dependent deduction will rise to 6,2 million VND (a 2,2 million VND increase). These new deduction levels will apply starting from the 2026 tax year.

With these new deduction levels, an individual taxpayer (without dependents) earning 17 million VND per month will not be required to pay tax from the 2026 tax year, after subtracting insurance contributions and the personal deduction.

Specifically, for an individual with a monthly income of 17 million VND, social insurance contributions are calculated based on their income. The total insurance amount, 10,5% (8% for social insurance, 1,5% for health insurance, and 1% for unemployment insurance), equals 1,785 million VND. The total deductible amount, which includes the 15,5 million VND personal deduction, is 17,285 million VND. Since this amount is greater than their income, they are not yet liable for tax.

Similarly, an individual with one dependent, earning 24 million VND per month, will also not be required to pay tax after subtracting insurance contributions. Likewise, an individual with a monthly income of 31 million VND and two dependents will also not be liable for tax under the progressive tax schedule.

Anh Tu