Proposed Benefits for Millions of Workers to Take Effect Next Year

The Ministry of Finance has submitted a draft resolution to the Ministry of Justice for review, proposing an adjustment to the family circumstance deduction for personal income tax. The proposal aims to increase the deduction for taxpayers from VND 11 million/month to VND 15.5 million/month and the deduction for each dependent from VND 4.4 million to VND 6.2 million/month.

According to the Ministry of Finance, these adjustments are based on the average income growth rate per capita and GDP per capita from 2020 to the present, which have both increased by approximately 40-42%.

Under the proposed changes, individuals earning VND 15 million/month would not be required to pay taxes after deducting social insurance, health insurance, and unemployment insurance contributions. For those earning VND 20 million/month, the tax payable would be approximately VND 120,000.

If implemented, the new deduction would exempt 95% of taxpayers in the first tax bracket from paying taxes. Additionally, some taxpayers in the second bracket would either move to the first bracket or become exempt. This adjustment would significantly reduce tax obligations across all brackets.

The Personal Income Tax Law is expected to be presented to the National Assembly for consideration in the October session and will take effect from July 1, 2026. The new family circumstance deduction will be implemented earlier via a resolution from the Standing Committee of the National Assembly, applicable until the government issues new regulations. If approved, the new deduction will apply from the 2026 tax year.

The Ministry of Finance estimates that personal income tax revenue will be approximately VND 84.477 trillion/year, a reduction of about VND 21 trillion compared to current levels. The number of taxpayers will also decrease to 2.21 million, a reduction of 2.18 million people, or 49.66%.

Proposals to Increase Family Circumstance Deduction to VND 18-20 Million/Month

Regarding the proposal, Assoc. Prof. Dr. Phan Hữu Nghị from the National Economics University shared with Lao Động online that, given the rapid changes in income and living costs, the VND 15.5 million deduction does not fully reflect the current income and living expenses of the population. He suggests raising the deduction for earners to start at VND 20 million.

Dr. Phan Hữu Nghị explains that statistics show the income group of VND 18-23 million per month constitutes the largest portion of the workforce. Therefore, the taxable income threshold should be adjusted to VND 20-25 million per month to accurately reflect income realities and avoid heavy taxation on the middle class. This adjustment would also ensure stability over time, rather than becoming outdated shortly after implementation.

Echoing Dr. Nghị’s views, many experts believe that the proposed deduction of VND 15.5 million/month for taxpayers and VND 6.2 million/month for dependents is only suitable in the short term and does not accurately reflect the actual living costs, especially in major cities like Hanoi and Ho Chi Minh City.

In an article for Đại đoàn kết newspaper, Dr. Nguyễn Ngọc Tú, a lecturer at Hanoi University of Business and Technology, suggests increasing the family circumstance deduction to approximately VND 18 million/month for taxpayers and VND 9 million/month for dependents, effective from the 2025 tax year.

According to Dr. Nguyễn Ngọc Tú, implementing the deduction from the 2026 tax year is too delayed. Applying it from 2025 would provide additional income for workers, enabling them to spend more, stimulate consumption, and increase labor productivity.

The Điện Biên Provincial National Assembly Delegation also recommends setting the deduction at VND 20 million (equivalent to VND 240 million per year) for taxpayers and VND 10 million for dependents. This would ensure fairness, support taxpayers in managing rising living costs, and encourage voluntary tax declaration and payment.