According to Resolution No. 110/2025/UBTVQH15 on adjusting the family circumstance deduction for personal income tax, the deduction for taxpayers has been increased to 15.5 million VND per month, and for each dependent, it is 6.2 million VND per month. The resolution takes effect from January 1, 2026, and applies to the tax year 2026.
The adjustment of the family circumstance deduction has long been anticipated by the public, and experts have expressed their support. However, many have proposed implementing it from the tax year 2025 instead of delaying until 2026. Early implementation would have an immediate positive impact on the income and morale of millions of workers, addressing the challenges they have faced for years due to the outdated deduction levels.
From the tax year 2026, the family circumstance deduction for taxpayers will be 15.5 million VND per month, and for each dependent, it will be 6.2 million VND per month.
The current family circumstance deduction is 11 million VND per month for taxpayers and 4.4 million VND per month for each dependent, applicable since the tax year 2020.
In a recent draft report summarizing feedback on the amended Personal Income Tax Law submitted to the Government for opinion, the Ministry of Finance provided explanations on this matter.
The review committee opined that the tax year 2025 will be settled by the end of Q1/2026. Therefore, they requested the drafting agency to clarify the legal application for the personal income tax year 2025 for salaried workers and business households/individuals, to ensure the draft law is clear and easy to implement.
According to the Ministry of Finance, applying the new deduction for the current tax year would entail numerous procedures related to tax settlement and refunds, as individuals with income from salaries and wages have already had taxes deducted by their employers at the beginning of the year.
This would significantly impact budget estimates and the workload for processing tax refunds. Additionally, given the current situation with storms, floods, and natural disasters, the state budget needs to prioritize addressing these issues.
Furthermore, some newly taxable income sources would need to fulfill tax obligations immediately, making the implementation from the tax year 2025 potentially disadvantageous for taxpayers. Moreover, proposing the law’s full effect from January 1, 2026, is impractical, as the law is expected to be reviewed and approved by the National Assembly in December 2025.
“The remaining time to finalize policies in detailed regulations is very short, along with the need for training and dissemination to ensure smooth and accurate declaration and deduction from the outset,” the Ministry of Finance explained.
To ensure stability and suitability for tax administration, the Ministry of Finance stated that the draft law stipulates implementation from July 1, 2026. Specifically, provisions related to income with an annual tax period, such as salaries, wages, and business income, will apply from January 1, 2026.
90% Businesses Exempt from Tax Payments as Tax Threshold Raised to VND 500 Million
The latest draft of the Personal Income Tax Law revises the tax-exempt revenue threshold for individuals and households, increasing it from 200 million VND to 500 million VND annually.
Are Holiday and Tet Bonuses Subject to Personal Income Tax?
Anticipated by many, holiday and Tet bonuses bring joy, but understanding when they’re subject to personal income tax, which amounts are exempt, and how in-kind rewards are regulated is essential.
Tax-Free Revenue Threshold of 500 Million VND Still Unrealistic: Businesses Propose Increase to 1 Billion VND
The average annual revenue for small traders in the market typically ranges from 1.5 to 3 billion VND, yet their ability to substantiate expenses is virtually non-existent.
When Capital Gains Tax Applies to Real Estate Transfers: Essential Information
The Ministry of Finance has announced that once sufficient digitized land data is linked to the VNeID system, it will gradually implement income tax collection on real estate transfer income, accurately reflecting its true nature. However, tax policies are not considered the primary or most effective tool to curb real estate speculation.
Implementing a $500 Million Revenue Tax Exemption Threshold: 90% of Businesses Exempt from Taxation
The Ministry of Finance has proposed an increase in the tax-exempt revenue threshold for small businesses, a move that could significantly benefit household enterprises. This initiative aims to alleviate the tax burden on smaller operations, fostering growth and financial stability within the sector.
