Vietnam to raise monthly personal income tax deductions to $589 starting 2026

The National Assembly Standing Committee approved the adjustment on Friday, marking the first change to deduction levels since 2020. 

The new rates represent an increase of more than 40 percent from the current levels of VND11 million ($417.7) for taxpayers and VND4.4 million ($167) per dependent.

Deputy Minister of Finance Nguyen Duc Chi said the increase reflects the rise in average income per capita and GDP per capita, along with higher living costs. 

By the end of 2025, Vietnam's consumer price index (CPI) is projected to have risen 21.24 percent compared to 2020, providing the legal basis for the adjustment.

Chi explained that deduction levels must correspond with price fluctuations, which are influenced not only by CPI but also by changes in income, GDP, and average spending over time. 

Data from the National Statistics Office shows that average income and GDP per capita have both increased by around 40 to 42 percent since 2020.

Under the new policy, individuals earning from VND17.285 million ($656.5) per month without dependents will be subject to income tax at the lowest rate of five percent. 

The taxable income threshold will rise to VND24.22 million ($919.7) for those with one dependent and VND31.155 million ($1,138) for those with two dependents.

The Ministry of Finance estimates that the adjustment will reduce state budget revenue by approximately VND21 trillion ($797.4 million) annually.

Phan Van Mai, chairman of the National Assembly's Finance and Budget Committee, said most members supported the plan. 

However, some suggested incorporating a buffer by basing future deduction levels on projected income or GDP per capita growth for 2025, 2026, and the coming years.