Personal income tax (PIT) is an important financial obligation that every employee must fulfill when they have income. Calculating PIT correctly not only helps individuals declare accurately, but also ensures the right to tax deductions and exemptions and avoids errors in the settlement process.
This article will provide detailed instructions on how to calculate personal income tax in 2025, including how to determine taxable income, valid deductions, progressive tax tables, and specific illustrative examples. With complete and updated instructions according to the latest regulations, employees and businesses will easily master the process of declaring and paying taxes on time and optimizing their tax obligations.
Overview of personal income tax
Personal income tax (PIT) is one of the important taxes of the state, directly affecting employees, business individuals and income-paying enterprises. Understanding how PIT is calculated will help taxpayers be proactive in declaring, paying taxes on time and optimizing tax obligations.
In 2025, the Personal Income Tax Law has many important new points, especially related to family deductions, progressive tax schedules and taxable income ranges. This article will provide detailed instructions, along with practical examples, to help you grasp how to calculate Personal Income Tax and refer to how to calculate Corporate Income Tax for businesses.
What is personal income tax?
Personal income tax (PIT) is a direct tax applied to income generated by individuals, including income from salaries, wages, business, property transfer, prizes, copyrights, capital investment and other legal sources of income. The objective of personal income tax is to ensure fairness in society through income redistribution, while creating a budget source for the state to serve socio-economic development activities.
The role of personal income tax
Personal income tax (PIT) is not only an important source of revenue for the state budget but also plays an essential role in regulating society and supporting economic development. Specifically, the role of PIT includes:
- Income regulation and social equity: Personal income tax is calculated according to a progressive tax schedule, meaning that people with high incomes will pay higher tax rates. This helps reduce the gap between rich and poor, contributing to promoting equity in society.
- Creating a budget source for public activities: Revenue from personal income tax is used to invest in public services such as health care, education, infrastructure and other social welfare programs, helping to improve the quality of life for people.
- Promoting legal compliance and financial transparency: Properly declaring and paying personal income tax helps individuals and businesses maintain transparency in income and finances, while limiting the risk of administrative penalties due to incorrect declaration or late tax payment.
- Supporting macroeconomic management: Personal income tax is a tool to help the State monitor income flow, thereby introducing economic, tax and social security policies appropriate to the actual situation of society.
Legal basis of personal income tax
For individuals and businesses to properly fulfill their tax obligations, it is very important to have a firm grasp of the legal basis of personal income tax. These legal documents provide detailed guidance on taxable subjects, taxable income, tax schedules, family deductions, tax declaration and payment. Below are the main legal documents related to personal income tax in 2025:
| Legal documents | Main content | Note |
| Law on Personal Income Tax (Law No. 04/2007/QH12, amendments, supplements) | Regulations on taxable subjects, taxable income, family deductions, personal income tax schedule. | The most important legal basis for applying personal income tax. |
| Decree No. 65/2013/ND-CP (Amendment, supplement) | Detailed instructions on the implementation of the Law on Personal Income Tax, including tax declaration, payment and incentives and exemptions. | Detailed guidance document on the Law on Personal Income Tax (effective from 2013). |
| Circular No. 111/2013/TT-BTC (Amendment, supplement) | Instructions on declaration, tax deduction, family deduction, income tax from salary and wages. | Implement in detail the provisions of the Law and Decree. |
| Circular No. 92/2015/TT-BTC | Guidance on income tax from income other than salary and wages (business, transfer, prize winnings, investment...). | Ensure individuals and businesses apply the correct tax rate to each type of income. |
New points in personal income tax 2025: family deductions, tax table, taxable income
To properly declare and pay personal income tax in 2025, individuals and businesses need to understand the important changes compared to previous years. These new points are mainly related to family deductions, progressive tax schedules and taxable income ranges, which directly affect the amount of tax payable. The table below summarizes the important changes in detail, making it easy for taxpayers to follow and apply in practice.
| Content changes | Rates Applicable before 01/07/2020 | Current Rate (Effective from 01/07/2020 and for 2025) | Take exact notes |
| Personal family deduction | 9 million VND/month | 11 million VND/month (132 million VND/year) | The VND 11 million level has been effective since mid-2020 according to Resolution 954/2020/UBTVQH14 and is applied for the 2025 tax period. |
| Dependent deduction | 3.6 million VND/month/person | 4.4 million VND/month/person | The VND4.4 million level has been effective since mid-2020 and is applied for 2025. |
| Progressive tax schedule | 7 tax levels: 5% – 35% | Maintain 7 tax levels: 5% – 35% | The tax rates and number of levels remain unchanged from 2020 to present. |
| New taxable income | Salary, business, transfer… | There are no fundamental changes in the main taxable income groups. | Income from high-value bonuses and gifts is still subject to personal income tax for the part exceeding the threshold of 10 million VND, which is not a new regulation in 2025. |
Subjects of personal income tax: resident and non-resident individuals, income-paying enterprises
Determining the subjects of personal income tax is an important step to declare and pay taxes in accordance with regulations. According to current tax law, subjects of personal income tax include the following groups:
Resident Individual
Before calculating personal income tax, individuals need to determine which group they belong to in order to apply the correct regulations. Resident individuals are one of the main subjects subject to personal income tax, with their own characteristics and benefits related to taxable income, family deductions and compulsory insurance deductions. Understanding the residency criteria will help individuals declare and pay taxes accurately, avoiding errors or overpayment of taxes.
- Is a person who is present in Vietnam for 183 days or more in a year or has a permanent residence in Vietnam (registered permanent residence or rented house for 183 days or more).
- Taxable income: All income arising within and outside the territory of Vietnam, applying global tax principles.
- Advantages: Family deductions and mandatory insurance contributions are applied when calculating taxes.
Non-resident individual
Besides resident individuals, non-resident individuals are also a group. personal income tax payers but with different regulations. The correct classification of non-resident individuals helps to determine the correct taxable income, applicable tax rates and ensure tax declaration and payment in accordance with the law, avoiding confusion with resident individuals.
- Is a person who does not meet the above residency criteria.
- Taxable income: Taxable only on income arising in Vietnam according to the territorial tax principle.
- Note: No family deductions apply; tax is payable at a fixed rate prescribed for each type of income.
Income paying businesses
In addition to resident and non-resident individuals, income-paying enterprises are also subject to personal income tax, with the role of deducting, declaring and paying taxes on behalf of individuals. This is a mandatory responsibility for organizations, companies, administrative units or business households that pay income to employees, collaborators or individuals providing services.
When paying taxable income, enterprises must deduct personal income tax at source, declare and pay to the tax authority on time, and issue deduction certificates to individuals upon request to serve tax settlement.
Enterprises need to clearly determine the residence status of individuals to apply the correct tax rate and tax calculation method. For resident individuals, tax is calculated according to the progressive tax table, while for non-resident individuals, a fixed tax rate is applied on income generated in Vietnam. Correct deductions and declarations not only help enterprises avoid errors, underpayment or overpayment of tax, but also ensure compliance with the law, contributing to transparency in income management and tax obligations.
Principles of calculating personal income tax
Before starting to calculate the amount of personal income tax payable, individuals and businesses need to understand the basic principles applicable to tax declaration and calculation. Understanding these principles helps to correctly determine taxable income, valid deductions and apply the appropriate tax schedule, thereby declaring accurately, optimizing tax obligations and avoiding errors or violations of the law.
Classification by tax payment method
Personal income tax is implemented in two main forms. The first is withholding at source, meaning that the business or organization paying income will directly deduct tax before paying salary, bonus or other income to the individual. The second is self-declaration and tax payment, which applies to individuals with income arising from other than salary, wages such as business, property transfer or investment, must self-declaration and pay tax directly to the tax authority.
Principle of calculating tax according to progressive tax schedule
For resident individuals with income from salaries and wages, a progressive tax schedule is applied, meaning the higher the income, the higher the applicable tax rate. For other types of income such as business, transfer, winnings, capital investment, a fixed tax rate is applied according to the law.
How to calculate personal income tax specifically for employees
Calculating personal income tax (PIT) for employees in 2025 needs to follow the following basic steps, combined with family deductions and mandatory insurance.
Determining taxable income
For employees, taxable income is mainly wages and salaries. Taxable income is calculated as the total actual income received in a month or year, minus the following amounts:
- Family deduction: 11 million VND/month for yourself and 4.4 million VND/month for each dependent.
- Compulsory insurance contributions: Social insurance, health insurance, unemployment insurance.
- Legal voluntary pension funds.
|
Taxable income = Total income − Family deductions − Insurance premiums |
Apply progressive tax schedule
Resident workers are subject to a progressive tax schedule with tax rates ranging from 5% to 35% depending on their income level. Higher tax rates apply to higher income levels. Example income levels (2025 reference):
- 5% for income up to 5 million VND/month
- 10% for income of 5 - 10 million VND/month
- 35% for income over 80 million VND/month
Personal income tax is calculated by applying each tax rate to each part of income in a progressive schedule.
Personal income tax calculation formula
The basic formula for calculating personal income tax for resident employees according to the progressive tax schedule is written as follows:
|
Personal Income Tax = Taxable Income × Partial Tax Rate |
In there:
- Taxable income is the total actual income received by an individual during the period, after deducting family deductions, compulsory insurances (social insurance, health insurance, unemployment insurance) and legal voluntary pension funds.
- The tax rates are applied according to a progressive tax schedule, meaning that different income levels will be subject to different tax rates. Higher incomes will be subject to higher tax rates, ensuring the principle of fairness in tax payment.
Illustrative example
Employee B has a total monthly income of 30 million VND. For this individual, the family deduction applied to himself is 11 million VND, he has no dependents and must pay compulsory insurance of 2.5 million VND.
Step 1: Calculate taxable income
Taxable income is determined by taking gross income minus deductions and mandatory insurance:
|
Taxable income = 30,000,000 − 11,000,000 − 2,500,000 = 16,500,000 VND |
Step 2: Calculate personal income tax according to the progressive tax schedule
The first 5 million income is subject to the tax rate of 5%, equivalent to 250,000 VND. The portion from 5 to 10 million VND is subject to the rate of 10%, equivalent to 500,000 VND. The remaining 6.5 million VND is subject to the rate of 15%, equivalent to 975,000 VND. The total personal income tax payable for this month is:
|
250,000 + 500,000 + 975,000 = 1,725,000 VND |
Important notes when calculating personal income tax
When calculating personal income tax, employees and businesses need to pay attention to some important points to declare and pay taxes accurately and avoid errors. Understanding these notes helps ensure that tax obligations are fully implemented, while optimizing benefits in terms of family deductions, insurance and applicable tax rates.
| Note | Detail |
| Identify the right audience | Whether an individual is resident or non-resident will be subject to global or territorial tax principles, which directly affects taxable income. |
| Family deduction | Applicable to resident individuals only; deduction for self 11 million/month and 4.4 million/month for each dependent. Dependents must be registered with the tax authorities. |
| Compulsory insurance | Including social insurance, health insurance, unemployment insurance, deducted from taxable income. Legal voluntary pension funds are also deducted when calculating tax. |
| Income classification | Income from salaries and wages is subject to progressive tax rates; other income (transfers, investments, prizes) is subject to fixed tax rates. |
| Declare and pay taxes on time | Enterprises deduct tax at source and declare it for employees; individuals declare tax on other income. Comply with tax payment deadlines to avoid late payment penalties. |
| Update new tax laws | Laws, decrees and circulars relating to personal income tax are regularly updated; it is necessary to monitor to accurately apply new deductions, tax schedules and regulations. |
Conclude
Personal income tax (PIT) is an important financial obligation that helps employees and businesses determine the correct amount of tax to pay, ensuring full compliance with legal regulations. The correct application of the progressive tax schedule, deductions and taxable income levels not only helps to declare correctly and fully but also optimizes benefits, limits errors and minimizes legal risks during the settlement process.
In particular, family deductions and compulsory insurances are key factors that directly affect the amount of personal income tax payable. Understanding the subjects eligible for deductions, the latest deduction levels and tax-exempt incomes helps taxpayers be more proactive in managing their personal finances, while helping businesses deduct and declare accurately for employees.
For detailed instructions on how to calculate personal income tax, as well as updates on family deduction regulations and the latest tax laws, you can contact MAN – Master Accountant Network. MAN provides tax consulting services, tax accounting and audit Professional, helping individuals and businesses fulfill tax obligations accurately, quickly and optimally.
Service contact information at MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- Email: man@man.net.vn
