Recent Economic Developments: Adjustments to Personal Income Tax Deductions in Vietnam
In response to public concerns regarding the need to adjust personal income tax (PIT) deductions, the Ministry of Finance has announced plans to review and revise the family circumstance deduction in October 2025. This move comes as the current regulations no longer align with the rising cost of living and income levels in Vietnam.
According to Article 1, Clause 4 of the Law on Personal Income Tax (PIT) No. 26/2012/QH13, the government is required to adjust the family circumstance deduction when the Consumer Price Index (CPI) fluctuates by more than 20% since the law’s enactment or the last adjustment. This ensures that tax deductions remain relevant to economic changes.
Data from the General Statistics Office reveals that the CPI has steadily risen over the past six years: 3.23% in 2020, 1.84% in 2021, 3.15% in 2022, 3.25% in 2023, 3.63% in 2024, and a projected 4.5-5% in 2025. Cumulatively, this represents a 21.24% increase from 2020 to 2025, triggering the need for a deduction adjustment.
Based on these figures and Resolution No. 1326/NQ-UBTVQH15 dated December 23, 2024, the National Assembly Standing Committee (NASC) is expected to approve the revised family circumstance deduction during its 50th session in October 2025.
The Ministry of Finance is currently drafting the NASC Resolution to amend the deduction in accordance with the Law on Promulgation of Legislative Documents and related guidelines. The draft has been circulated to National Assembly delegations, ministries, localities, the Vietnam Fatherland Front Central Committee, the Vietnam Chamber of Commerce and Industry, and other stakeholders for feedback.
On September 11, 2025, the Ministry of Justice’s Appraisal Council reviewed the draft Resolution.
Additionally, under Plan No. 81/KH-UBTVQH15 issued on November 5, 2021, the Ministry of Finance is revising the Law on Personal Income Tax to align with the Politburo’s Conclusion No. 19-KL/TW and the 15th National Assembly’s legislative agenda. The revised law, submitted to the Government on September 7, 2025 (Dispatch No. 570/TTr-BTC), empowers the Government to adjust deductions based on economic conditions.
The draft law also proposes additional specific deductions in areas such as healthcare and education to better reflect real-life expenses.
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