Official: Mothers Raising Two Children with Monthly Income of VND 28 Million Exempt from Personal Income Tax

On October 17, the National Assembly Standing Committee voted to adopt a resolution adjusting the family circumstance deduction for personal income tax calculations to 15.5 million VND per month.

Accordingly, the deduction for taxpayers will increase from 11 million VND to 15.5 million VND per month, while the deduction for each dependent will rise from 4.4 million VND to 6.2 million VND per month. This new policy will take effect from the 2026 tax year.

With the new deduction, a taxpayer with no dependents will only be liable for tax if their income exceeds 17.285 million VND per month. For those with one dependent, the taxable threshold increases to 24.22 million VND per month, and for two dependents, it rises to 31.155 million VND per month. This adjustment represents a 40% increase compared to the current rates, accurately reflecting price and income changes over the past five years.

According to the Ministry of Finance, raising the family circumstance deduction will directly impact millions of salaried workers. The most significant benefits will go to those with middle and low incomes. Most individuals currently in the first tax bracket will shift to being exempt from tax.

The Ministry of Finance also noted that this adjustment will reduce state budget revenue by approximately 21 trillion VND annually. However, the government considers this necessary to alleviate tax burdens amid rising living costs and inflation eroding real incomes.

For example, with the newly approved deduction, an individual earning 15 million VND per month in salary and having no dependents, after deducting social insurance, health insurance, and unemployment insurance, will not be required to pay personal income tax.

In contrast, for a similar case but with an income of 20 million VND, the personal income tax payable is 120,000 VND per month. This amount represents approximately 0.6% of the total income.

For someone earning 30 million VND with one dependent, the monthly tax payable is 265,000 VND.

If there are additional allowances, subsidies, or voluntary pension insurance contributions deductible before tax calculation, the taxable amount will be even lower (or zero).

With the same income but two dependents, the individual will not be required to pay personal income tax.

For those earning 40 million VND with two dependents, the calculation shows a monthly tax payable of 540,000 VND.

Case with two dependents

If an individual earns 28 million VND per month in salary, after deducting social insurance, health insurance, and unemployment insurance, they will not be required to pay personal income tax because:

+ Mandatory insurance at 10.5% (8% social insurance + 1.5% health insurance + 1% unemployment insurance) amounts to 2.94 million VND (28 million VND × 10.5%),

+ Family circumstance deduction is 27.9 million VND (for two dependents)

Thus, the total is 30.84 million VND. Therefore, an individual earning 28 million VND per month is not required to pay personal income tax.

If the income is 40 million VND per month, the mandatory insurance payment is 4.2 million VND, and the family circumstance deduction for two dependents is 27.9 million VND. Therefore, the taxable income is 40 – 4.2 – 27.9 = 7.9 million VND per month. The tax payable is: Tier 1 (5 million VND × 5%) is 250,000 VND, Tier 2 [(7.9 – 5) × 10%] is 290,000 VND. The total tax payable is 540,000 VND per month.

Thus, an individual earning 40 million VND per month will only pay 540,000 VND in tax monthly (approximately 1.35% of total income). If there are additional deductible allowances, subsidies, or voluntary pension insurance contributions, the taxable amount will be even lower.