Personal Income Tax 2026 in Vietnam: Key Changes Every Employer and Employee Should Know

As Vietnam’s labor market evolves amid policy reforms aimed at achieving double-digit growth and deeper global integration, Personal Income Tax (PIT) has emerged as a key issue for both employees and employers. After years without revision, Vietnam’s personal income tax brackets and family deductions are increasingly misaligned with today’s income realities and rising living costs.

At its year-end 2025 session, the National Assembly of Vietnam approved amendments to the Personal Income Tax Law, introducing significant changes that will take effect from 2026. This article outlines the policy background, key revisions, and the personal income tax benefits employees can expect under the new framework.

Personal Income Tax 2026: Why Should Employees Pay Attention?

On 10 December 2025, Vietnam’s National Assembly approved the amended Law on Personal Income Tax, marking the most substantial PIT reform in many years. The revised law is set to apply from 2026 and introduces important changes affecting salary income, wages, and employees’ tax entitlements.

However, the practical implementation, such as payroll applications and calculation details, may depend on forthcoming government decrees and Ministry of Finance circulars.

These changes are not solely intended to reduce tax burdens; they reflect broader economic and social shifts, including:

• Rapidly rising living costs while tax rates and deduction levels remained unchanged for many years

• Income growth that has not translated into equivalent purchasing power

• A complex tax structure with too many narrow brackets, making PIT calculations difficult for employees

• The need to enhance labor market competitiveness and support employers in retaining talent

Overall, the PIT reform 2026 is widely viewed as a positive adjustment aimed at:

• Better aligning tax policy with current income levels and living standards

• Reducing tax pressure on salaried employees

• Simplifying personal income tax calculations in Vietnam

Key Differences Between Personal Income Tax 2025 and 2026

1. Significant Increase in Deduction Levels from 2026

Item	2025	From 2026
Personal deduction	VND 11 million/month	VND 15.5 million/month
Dependent deduction	VND 4.4 million/month	VND 6.2 million/month

Higher deduction thresholds reduce taxable income, meaning:

• Many middle-income employees will pay less personal income tax

• Some employees may no longer be subject to PIT at all

2. New Personal Income Tax Bracket Structure: Reduced from 7 to 5 Brackets

From 2026, the progressive PIT rates applied to salary and wage income will be simplified to improve transparency and ease of application.

📊 New Personal Income Tax Rates in Vietnam (Effective from 2026)

Monthly Taxable Income	Tax Rate
Up to VND 10 million	5%
Over VND 10 – 30 million	10%
Over VND 30 – 60 million	20%
Over VND 60 – 100 million	30%
Over VND 100 million	35%

Compared with the current 7-bracket system, the new PIT structure:

• Widens income thresholds across tax brackets

• Maintains the top tax rate of 35% while raising the income threshold for its application

• Reduces the likelihood of “tax bracket creep” following modest salary increases

3. Personal Income Tax Calculation Examples: 2025 vs. 2026

For the same gross salary, personal income tax payable from 2026 will be lower than in 2025, thanks to higher deductions and wider tax brackets.

Case 1: No Dependents

Monthly Salary	PIT 2025	PIT 2026	Difference
VND 20 million	440,000	120,000	↓ 320,000
VND 30 million	1,627,500	635,000	↓ 992,500
VND 45 million	4,205,000	1,977,500	↓ 2,227,500
VND 70 million	10,306,200	6,370,800	↓ 3,935,400
VND 125 million	28,146,700	21,897,200	↓ 6,249,500

Case 2: One Dependent

With one dependent, PIT reductions from 2026 are particularly significant, especially for middle- and upper-middle-income earners.

Monthly Salary	PIT 2025	PIT 2026	Difference
VND 20 million	125,000	0	↓ 125,000
VND 30 million	967,500	257,500	↓ 710,000
VND 45 million	3,325,000	1,357,500	↓ 1,967,500
VND 70 million	9,113,500	5,130,800	↓ 3,982,700
VND 125 million	26,606,700	19,837,600	↓ 6,769,100

4. Summary Comparison: Current PIT Law vs. Amended Law (from 2026)

Comparison Criteria	Current Law (until end-2025)	New Law (from 2026)
Legal basis	Current PIT Law and guiding regulations	Amended PIT Law approved in late 2025
Personal deduction	VND 11 million/month	VND 15.5 million/month
Dependent deduction	VND 4.4 million/month	VND 6.2 million/month
Number of tax brackets	7	5
Salary PIT structure	Narrow brackets, complex	Wider brackets, simpler
Top tax rate	35% (applies above VND 80m/month)	35% (applies above VND 100m/month)
Effective date	-	From 1 January 2026
Impact on employees	Higher tax burden	Lower PIT, higher take-home income

Impact of the Personal Income Tax Reform 2026

For Businesses and the Labor Market

For foreign investors—particularly in manufacturing, technology, and high-value services—labor costs and talent retention are critical considerations.

When the personal income tax in Vietnam is reduced:

• Employees’ net income increases even if gross salaries remain unchanged

• Employers face less pressure to raise nominal salaries aggressively

• Total labor costs become more predictable and sustainable

These factors help Vietnam maintain its labor cost competitiveness against regional peers such as Thailand, Malaysia, and Indonesia.

While PIT reform is not the sole driver of foreign investment, it plays a vital role in strengthening labor market competitiveness, stabilizing the workforce, and signaling positive policy direction. In an increasingly competitive FDI environment, such reforms reinforce Vietnam’s position as a long-term investment destination.

For Employees

According to expert assessments, the new personal income tax policy offers clear advantages:

• Higher take-home pay due to reduced tax obligations

• Tax policy more closely aligned with real living costs

• Simpler, more transparent tax calculations

For employees, lower PIT is not just a number on the payslip—it represents a tangible improvement in income quality, living standards, and perceived fairness.

Understanding the PIT changes effective from 2026 allows employees to better manage personal finances and safeguard their tax rights.

Personal Income Tax 2026: Considerations for Workforce Planning and Payroll

From 2026, Vietnam’s personal income tax system will undergo meaningful reforms that clearly favor employees. Staying informed about family deductions, PIT brackets, and implementation timelines will help employees proactively manage income and fully benefit from the new tax framework.

Sources: 

• https://thuvienphapluat.vn/ma-so-thue/phap-luat-thue/chinh-thuc-01012026-ap-dung-bac-thue-tncn-moi-va-muc-giam-tru-moi-216792.html

• https://thuvienphapluat.vn/phap-luat-doanh-nghiep/bai-viet/cach-tinh-thue-tncn-2026-tu-tien-luong-tien-cong-va-vi-du-minh-hoa-16208.html

• https://znews.vn/sua-luat-thue-thu-nhap-ca-nhan-giam-ganh-nang-van-con-ban-khoan-post1612097.html

• https://luatvietnam.vn/thue-phi-le-phi/toan-canh-chinh-sach-moi-ve-thue-nam-2026-565-105808-article.html

Related Internal Articles:

• Why Retention Will Define Vietnam’s 2026 HR Agenda

• Southeast Asia Pay Outlook 2026 – How Vietnam Compares

• Vietnam 2025 in Review: Lessons for 2026 Recruiters

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