Personal income tax overview

Personal income tax (PIT) is a direct tax levied on the income of individuals whose income is generated in or from Vietnam. In 2025, with many changes in tax administration regulations and the application of electronic invoices, individuals in fields such as IT, real estate, finance, education, e-commerce, etc. need to clearly understand how to calculate PIT, deduction rights and the latest regulations to avoid risks and comply with the law.

What is personal income tax? Applicable subjects and tax calculation principles

According to Article 2 and Article 3 of the 2014 amended Law on Personal Income Tax, both residents and non-residents in Vietnam are subject to personal income tax if they have income from the following sources:

• Income from wages and salaries
• Business income (self-employment, individual household)
• Income from real estate transfer, capital transfer
• Income from winnings, copyrights, gifts…

Resident individuals (present in Vietnam >= 183 days/year) are taxed according to the progressive tax schedule, while non-resident individuals are subject to a fixed tax rate of 20% on all income generated in Vietnam.

How to calculate personal income tax according to the 2025 progressive table

For resident individuals with income from salaries and wages, personal income tax (PIT) is calculated according to a progressive tax schedule, meaning that each income portion within different thresholds will be subject to a corresponding tax rate, instead of being subject to a fixed total rate.

The calculation formula is as follows: Personal income tax payable = (Taxable income – Deductions) × Tax rate by level

This method of calculation helps ensure the principle of fairness, people with higher incomes will pay more taxes but in increasing parts, not cumulatively.

Note: This is the income after deducting family allowances, compulsory insurance and other legal contributions. Calculating the correct tax amount for each level is an important factor in the year-end settlement to avoid underpayment or overpayment.

Personal income tax deductions applicable in 2025

When calculating personal income tax (PIT), taxpayers are allowed to deduct certain amounts to ensure fairness and compliance with their actual tax payment capacity. These deductions are stipulated in Article 19 of the PIT Law and will continue to be applied stably in 2025.

Specifically as follows:

• Family deduction for the taxpayer himself:
  The fixed deduction is 11 million VND/month, equivalent to 132 million VND/year.

• Deductions for dependents:
  Each eligible dependent (young children, elderly parents, spouse with no income, etc.) is entitled to a deduction of VND 4.4 million/month, equivalent to VND 52.8 million/year. Dependents must be properly registered and have a personal tax code.

• Compulsory insurance:
  Including social insurance (SI), health insurance (HI), unemployment insurance (UI) paid by employees according to the law. This is the part deducted before determining taxable income.

• Charitable, humanitarian and educational contributions:
  Taxpayers can deduct contributions to licensed organizations if they have valid documents, such as receipts, acceptance decisions, etc.

These deductions are only calculated when there are complete and valid supporting documents and the declaration is made on time. Missing or incorrect declaration of dependents is a common mistake in current personal income tax settlement.

Personal income tax for each industry: characteristics and specific notes

Information Technology (IT) Industry: Personal Income Tax for Engineers and Project Personnel

For programmers, testers or project managers in the IT industry, income usually includes a fixed salary and quarterly or project progress bonuses. The characteristic of this industry is that bonuses are often unstable and can arise depending on the situation, making it easy for employees to miss when declaring personal income tax.

In addition, businesses may not have fully deducted non-contractual bonuses or proactively settled this portion, forcing individuals to calculate and fulfill their tax obligations to the tax authorities. A common mistake is forgetting to deduct compulsory social insurance when calculating taxable income, leading to significant errors.

Real Estate Industry: Separate Personal Income Tax from Commission and Transfer Tax

For real estate brokers and sales staff, income usually comes from transaction commissions — an amount that is not fixed, and can be up to tens of millions of VND/time. In principle, personal income tax from this commission is calculated as wages, which means it is subject to a progressive tax rate.

However, if an individual directly buys and sells real estate, the income from the transaction will be subject to real estate transfer tax, applied at a fixed rate of 2% on the contract price. Confusion between these two types of taxes can cause many employees or investors to declare incorrectly, even be punished.

Freelancer, content creator and creative industry

Freelancers in fields such as content writing, graphic design, video production or advertising often do not sign formal employment contracts. In this case, the paying company usually deducts 10% of personal income tax at source if the payment is over 2 million VND/time.

For low-income earners, the 10% deduction may result in higher taxes than actually paid. Therefore, individuals need to self-settle their personal income tax at the end of the year to get a refund of the overpayment. In addition, freelancers should proactively register for personal tax codes and dependents (if any) to enjoy reasonable deductions.

Finance and banking industry

The income of employees in the banking and finance sector often includes many components such as salary, performance-based bonuses, commissions, welfare support, and sometimes dividends from internal investments. Some of these items are not deducted in advance by businesses, forcing employees to declare them themselves when finalizing personal income tax.

In many cases, bonuses in the form of stocks and bonds are considered “internal benefits”, but legally they are still taxable income. If not declared correctly, individuals can easily be subject to tax collection during tax audits.

Education industry

Many lecturers and teachers earn additional income from tutoring and part-time teaching. If these amounts are not included in the official employment contract, the hiring unit often deducts personal income tax 10% at source, even if the individual's annual income is below the taxable level.

Therefore, lecturers need to finalize their taxes at the end of the year to be considered for a tax refund. A real situation is that a lecturer only has a total income of about 120 million/year but is still deducted 10% throughout the year due to not providing complete exemption documents.

E-commerce industry

With the strong development of platforms such as Shopee, Lazada, TikTok Shop or affiliate marketing, many individuals are earning income online without signing contracts with any organization. However, since 2023, the General Department of Taxation has connected data with banks and e-commerce platforms, allowing individuals to determine their income through receiving accounts and tax codes.

For income from sales, affiliate marketing or content creation on digital platforms, employees need to self-declare personal income tax, and register their business lines and tax codes if they occur regularly. Failure to declare may result in additional taxes, fines and late payment fees when discovered.

Real case: How to calculate personal income tax in IT industry with project bonus

To better illustrate how to calculate personal income tax (PIT) according to the progressive tax schedule, let's consider the specific situation of Mr. Minh - a programming engineer working in Ho Chi Minh City.

Income and Circumstances Information

• Fixed salary: 30 million VND/month

• Quarterly project bonus: 60 million VND

• Dependent: Has 1 child (registered dependent tax code)

• Compulsory insurance deduction rate: 10.5% salary (equivalent to 3.15 million/month)

Mr. Minh's total income for the quarter is:
(30 million x 3) + 60 million = 150 million VND

Applicable personal income tax deductions

• Personal deduction: 11 million x 3 = 33 million VND

• Dependent deduction: 4.4 million x 3 = 13.2 million VND

• Compulsory insurance: 3.15 million x 3 = 9.45 million VND

Total deduction: 33 + 13.2 + 9.45 = 55.65 million VND

Taxable income

Taxable income for personal income tax = 150 million - 55.65 million = 94.35 million VND

This is taxable income for 3 months, so the average per month is:
94.35 million / 3 = 31.45 million VND/month

According to the 2025 progressive tax schedule, this income falls into tier 4, with tax rates ranging from 5% to 20% depending on the income.

How to calculate specific tax by level

Personal income tax payable in the quarter = 4.64 million x 3 = about 13.92 million VND

However, if Mr. Minh has a bonus that has not been deducted at source, or the business has not supported the settlement of this part, he will need to submit it directly through the system. thuedientu.gdt.gov.vn to fulfill tax obligations on time.

New 2025 Update on Personal Income Tax: Notable Points

Entering 2025, personal income tax (PIT) payers need to pay attention to some changes in tax management policies and technology to tighten transparency, fairness and convenience in declaration:

• Electronic invoices are required when paying salaries and bonuses: From 2025, businesses are required to issue electronic invoices for salaries and bonuses that are taxable income. This helps tax authorities easily track and retrieve personal income data for comparison when making final settlements.

• Personal identification number becomes unique tax code: Since 2024, the tax industry has implemented the use of personal identification code (12-digit CCCD number) instead of tax code. In 2025, it will be officially applied synchronously, helping taxpayers not to have to re-register and easier to manage.

• Proposal to increase personal deduction: According to the Draft Amendment to the Personal Income Tax Law under discussion, the personal deduction may increase from VND11 million to VND15 million/month. However, this proposal has not been approved by the National Assembly in 2025, so the current deduction level remains the same.

Reference source: General Department of Taxation Information Portal, Draft Law on Personal Income Tax 2024 - Ministry of Finance.

Comparison of personal income tax deduction regulations over the years

One of the key factors affecting the amount of personal income tax payable is the family deduction. Over the years, this amount has been adjusted, but it is still not commensurate with the increase in the cost of living.

Although the personal income tax deduction has improved over time, it still does not fully reflect the fluctuating cost of living, especially in large cities. In 2025, the deduction is still applied according to the regulations from 2020.

Conclude

In the context of increasingly transparent and digitalized tax regulations, understanding how to calculate personal income tax for each industry not only helps individuals avoid legal risks, but also helps businesses fulfill their obligations to deduct - declare - settle accurately and save costs.

From 2025, with the mandatory application of electronic invoices when paying salaries and bonuses, and personal identification codes completely replacing tax codes, the tax system is gradually becoming more automated and easier to reconcile. Therefore, regular updates of personal income tax policies are a priority for all employees, accountants and managers.

If you need to review your tax records, optimize deductions or support personal income tax settlement according to specific industries such as technology, finance, real estate or freelancer - let us help you. MAN – Master Accountant Network with you

Read more official instructions from General Department of Taxation – Personal Income Tax Guide 2025 to understand the latest regulations.