A debate is emerging in Vietnam regarding personal income tax deductions for medical and education expenses. While a draft decree proposes fixed annual deduction limits, many stakeholders advocate for a flexible mechanism that adjusts these amounts to reflect economic changes and rising living costs.

Under the proposed decree, taxpayers would be eligible for deductions for medical and education/training expenses for themselves and their dependents. The Ministry of Finance suggests a maximum annual deduction of 23 million VND for medical costs and 24 million VND for education and training. The Ministry of Finance calculates these proposed maximums at 2,3 times the average individual medical spending and 2,5 times the average individual education-training spending in 2024. This framework aims to reduce tax obligations for all taxpayers with such expenses, with lower-income individuals receiving a higher reduction rate. Most stakeholders, including the Ministry of Culture, Sports and Tourism, VCCI, Canon Vietnam, and several provincial People's Committees, support this approach, noting that rising costs necessitate higher deductions to ease the tax burden and encourage electronic invoice use.

However, a significant number of entities argue that fixed deduction amounts quickly become outdated. The Vietnam Academy of Social Sciences, for instance, proposes an automatic adjustment mechanism based on economic indicators such as the consumer price index (CPI), average spending levels, or other macroeconomic factors. Localities like Hue and Dong Nai, along with tax consulting firm Deloitte, echo this sentiment. The People's Committee of Hue City suggests linking deductions to the basic salary or family deduction, while the People's Committee of Dong Nai emphasizes periodic adjustments to align with price fluctuations and living standards, ensuring the policy's practicality and international relevance.

Deloitte further emphasizes that fixed amounts limit policy flexibility, stating, "In reality, the mechanism for adjusting fixed levels in decrees often does not keep pace with market developments, leading to the risk of not accurately reflecting reality when socio-economic conditions change."

Students at a high school, Hanoi, 2/2026. Photo: Hoang Giang

Specific concerns and alternative proposals have also been raised regarding the scope and fairness of the deductions. The American Chamber of Commerce in Vietnam (AmCham) highlights a disparity: employer-paid healthcare, critical illness treatment, or training expenses are tax-exempt without limits, while individual-paid expenses face deduction caps. AmCham recommends removing or raising these caps for employee-paid medical and education expenses, particularly for substantial costs like critical illness treatment.

The Vietnam Automobile Manufacturers' Association (VAMA) proposes removing the deduction ceiling for individuals with critical illnesses, allowing deductions based on actual costs after health insurance coverage. VAMA also suggests increasing education deductions by education level, proposing 30-40 million VND for general education and 50 million VND for university to reflect actual household costs, especially given high autonomous university tuition fees.

Fairness is another point of contention. The People's Committee of Hai Phong City notes that a fixed deduction benefits individuals with one dependent the same as those with many. Canon Vietnam shares this view, proposing a per-dependent deduction mechanism rather than a household ceiling. They also argue that a uniform deduction for urban and rural areas lacks practicality.

Despite these varied opinions, the Ministry of Finance maintains its proposed deduction levels. The agency asserts that these levels are part of a comprehensive policy calculation, balancing taxpayer support with the State budget's capacity.

Phuong Dung