The personal income tax law 2025, effective July 1st, introduces additional income categories for tax exemption.
Previously, employees only received tax exemption for the additional wages earned from night shifts or overtime. Under the new regulations, the entire wage amount from night work and overtime is now tax-exempt.
According to the Labor Code, night work hours are defined as 10 PM to 6 AM the following day. Employees working night shifts receive at least 30% higher wages compared to daytime work. Overtime wages are paid at a minimum of 150% on regular days, 200% on weekly rest days, and 300% on holidays and Tet.
The law also grants tax exemption for wages paid for unused annual leave days when an employee resigns or loses their job.
Additionally, several new income sources are now tax-exempt: wages from scientific, technological, and innovation activities; salaries of foreign experts working on non-refundable official development assistance (ODA) programs and projects by foreign non-governmental organizations in Vietnam; income of individuals participating in United Nations peacekeeping forces; and Vietnamese citizens working at representative offices of United Nations system organizations in Vietnam.
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Shift hours of garment workers in TP HCM, 8/2025. Photo: Nhu Quynh.
Other income types that remain tax-exempt include pensions paid by the Social Insurance Fund, supplementary pension funds, and voluntary pension funds, as well as wages of Vietnamese seafarers working for foreign or Vietnamese shipping companies engaged in international transport.
For income derived from wages and salaries of resident individuals, these new regulations will apply starting from the 2026 tax year. The law also introduces additional personal deductions for medical and education expenses, with specific amounts to be determined by the Government.
The Ministry of Finance has proposed a maximum annual deduction of 24 million dong for education expenses and 23 million dong for medical examination and treatment costs. If approved, the total maximum deduction would be 47 million dong per year. Under this proposal, an individual with one dependent would only be subject to tax if their monthly income exceeds 28,63 million dong.
Hong Chieu
