Family deduction rate in personal income tax payment proposed to increase

The Ministry of Finance has proposed that the deduction level in personal income tax payment is VND13.3-15.5 million per month and the deduction level for each dependent is VND5.3-6.2 million/month in 2026.

According to the current personal income tax policy which has been applied since July 1, 2020, under Resolution 954/2020/UBTVQH14, taxpayers have been entitled to a deduction of VND11 million per month for themselves and VND 4.4 million per month for each dependent, regardless of their place of residence.

The proposal is part of a draft resolution of the National Assembly Standing Committee on consensus on revising the family circumstance-based deduction policy under the Personal Income Tax Law.

The ministry attributed the CPI hike of around 21.24 percent in the 2020-2025 period, surpassing the 20 per cent benchmark for adjustment.

Personal income tax includes taxes from employees and individual business households. It is one of the three key pillars of the state budget, alongside corporate income tax and value-added tax (VAT).

The Ministry of Finance also suggested the number of tax brackets should be reduced from 7 to 5 for residents while making amendments to the Personal Income Tax Law. 

The move aims to make the tax system more stable, increase its flexibility, encourage income growth, and prevent the unreasonable situation where middle-income workers still face high tax rates.