Personal income tax rates are one of the most important factors that individuals and businesses need to understand in order to fulfill their tax obligations in accordance with Vietnamese law. In 2026, personal income tax rates will undergo significant adjustments related to the progressive tax schedule, deductions, and types of taxable income. This article provides detailed, up-to-date guidance on personal income tax rates, helping taxpayers and accountants fully understand the information to accurately calculate and settle taxes.
Overview of personal income tax rates
Personal income tax rate is the percentage applied to the total taxable income of an individual to calculate the amount of tax payable. This is the main tool for the State to regulate budget revenue and implement public finance policy. Understanding personal income tax rates helps individuals to be proactive in tax declaration, optimize deductions and avoid errors when finalizing.
Personal Income Tax Applicable to all individuals with income arising in Vietnam or with income sourced from Vietnam. Tax rates may vary depending on the type of income, for example income from salary, wages, income from business, investment or real estate transfer.
What is the personal income tax rate?
Personal income tax is a percentage applied to an individual's taxable income to determine the amount of tax payable, contributing to balancing the budget and regulating income. In Vietnam, there are two main calculation methods: progressive tax on income from salaries and wages, which helps high incomes to be taxed at a higher rate on the excess; and fixed tax rates for other incomes such as business, real estate transfer, winnings, and stock investment. This method ensures fairness between income groups and transparency in tax administration.
In 2025, the progressive tax schedule will be adjusted to support low-income workers through increased family allowances and other legal deductions such as compulsory insurance, charitable contributions, and dependents. At the same time, tax brackets will be refined to increase fairness, ensuring that high-income earners pay their fair share of taxes. These adjustments will help individuals and businesses calculate personal income tax rates accurately, optimize tax obligations, and comply with legal regulations.
The role of personal income tax rates
Personal income tax rates play an important role in many areas:
- State budget revenue: Personal income tax is an important source of revenue, accounting for a large proportion of total budget revenue.
- Regulating personal income: Through progressive tax schedules, high-income individuals pay more taxes, helping to reduce the gap between rich and poor.
- Social policy support: Personal income tax is a tool for the State to implement social security policies, reducing personal income for disadvantaged people.
Therefore, understanding personal income tax rates helps individuals be proactive in financial management, businesses optimize salary costs and accountants fulfill their obligations.
Classification of personal income tax rates
To determine the correct personal income tax rate, it is necessary to first classify the types of income according to the law. Each income group will apply a different tax calculation method, thereby helping individuals and businesses to declare correctly, avoid confusion and ensure compliance with tax laws.
| Income group | Tax calculation method | Applicable tax rate |
| Salary, wages | Progressive tax schedule | 5% – 35% in progressive steps |
| Business, asset transfer, capital investment | Flat tax rate | 0.5% – 20% depending on income type |
| Leasing of assets, copyrights, intellectual property rights | Flat tax rate | 5% – 10% according to the law |
Progressive tax schedule for 2026 and applicable personal income tax rates.
To calculate personal income tax rates from salaries and wages, Vietnam applies a progressive tax schedule. In 2025, the tax schedule will be adjusted with family and dependent deductions, helping low-income earners reduce their tax burden and ensure fairness between income levels.
Progressive tax schedule based on monthly taxable income
To calculate personal income tax rates for income from salaries and wages, Vietnam applies a progressive tax rate system. This method allows high-income earners to pay more tax on their higher-income earners, while lower-income earners are subject to a lower tax rate, ensuring fairness and reasonable distribution of tax obligations. Below is the progressive tax rate schedule applicable from 2026:
| Taxable income (million VND/month) | Tax rate (%) |
| 0 – 5 | 5% |
| Over 5 – 10 | 10% |
| Over 10 – 18 | 15% |
| Over 18 – 32 | 20% |
| Over 32 – 52 | 25% |
| Over 52 – 80 | 30% |
| Over 80 | 35% |
Fixed personal income tax rate for other income
In addition to income from wages and salaries, some other incomes apply a flat tax rate instead of a progressive tax schedule. This method makes tax calculation simple, transparent and suitable for irregular incomes or incomes of an investment or business nature. Specific incomes are as follows:
Business income
For individuals and organizations with business income, Vietnam applies a flat tax rate instead of a progressive tax schedule, to simplify tax calculation and declaration. This method helps to clearly determine tax obligations, avoiding complications when income is uneven or arises from multiple sources at the same time.
Specifically, the personal income tax rate on business income ranges from 0.5% to 5% depending on the business model and type of activity. For example:
- Small individual businesses and household businesses usually apply a rate of 0.5% on total revenue.
- Commercial, service, or business activities with larger turnover may apply rates from 1% to 5%, depending on tax authority regulations.
Applying a fixed tax rate to business income helps taxpayers easily calculate, declare correctly and pay taxes promptly, while ensuring that personal income tax rates are applied fairly and transparently.
Income from real estate transfer
For individuals with income from real estate transfers, Vietnam applies a flat tax rate to simplify tax calculation and ensure transparency in transactions. This method helps taxpayers determine the tax payable directly on the transfer price without having to apply a complicated progressive tax schedule.
Specifically, the personal income tax rate for income from real estate transfer is 2% on the transfer price. This means that when an individual sells a house, land or other types of real estate assets, the tax payable will be calculated directly at 2% on the total transfer value stated in the sales contract or legal transfer contract.
The application of the 2% fixed tax rate helps simplify declaration procedures, reduce the risk of errors, and at the same time ensures that individuals and tax authorities clearly understand their tax obligations, making the personal income tax settlement process transparent and quick.
Income from winnings, copyrights, intellectual property rights
For income from winnings, copyrights and intellectual property rights, Vietnam applies a flat tax rate to calculate personal income tax. This simplifies the tax declaration and payment process, while ensuring transparency and fairness between individuals who receive income irregularly or on a per-event basis.
Specifically, the applicable personal income tax rate is 10% on the total income value. This means that the entire amount received from these amounts will be subject to a flat tax rate of 10%, without applying the progressive tax schedule. Illustrative example:
- An individual who wins a lottery prize worth 50 million VND will pay 5 million VND in tax (10% of 50 million).
- Authors who receive royalties or book or song copyright fees worth 20 million VND will pay 2 million VND in tax.
The application of the fixed tax rate 10% helps taxpayers easily determine their obligations, declare quickly and avoid errors in final settlement, while creating transparency in personal income tax management for these incomes.
Deductions – The Key to Impacting Personal Income Tax Rates
To calculate the actual personal income tax rate, individuals should not only rely on the progressive tax rate schedule but also consider legal deductions. These deductions help reduce taxable income, thereby reducing the actual tax payable and ensuring fairness among different income groups. Below are the main deductions applicable in 2026:
| Deduction | Deduction level | Note |
| Personal family deduction | 11 million VND/month | Applicable to individual taxpayers |
| Deductions for dependents | 4.4 million VND/month/person | Applicable to children, spouse, and legally dependent parents |
| Compulsory insurance | Social insurance, health insurance, unemployment insurance | Deduction before tax calculation, reduce taxable income |
| Legal contributions | Charity, humanitarianism, education promotion | Must have legal documents, deductible before calculating tax |
Formula and detailed instructions for calculating personal income tax with progressive tax rates
To accurately determine the personal income tax rate payable, taxpayers need to understand the steps in the tax calculation process, from taxable income to the amount of tax payable. Many individuals and accountants often confuse "taxable income" and "taxable income," leading to incorrect declarations and directly affecting the final tax settlement at the end of the year. Below is a detailed step-by-step guide to help you understand how to apply the progressive personal income tax rate according to the new regulations in 2026.
Determining taxable income
Taxable income is the total income from salaries, wages and similar amounts that an individual receives during the tax period. Including:
- Salary, bonus, responsibility allowance, position allowance.
- Overtime pay (if paid above regular rate).
- Monetary or non-monetary benefits such as: company-paid transportation, company-paid housing, optional insurance, or stock options.
Correctly determining taxable income is an important foundation for accurately applying personal income tax rates according to the progressive tax schedule.
Less legal deductions
After determining total taxable income, taxpayers are allowed to deduct the following deductions before calculating tax:
- Family deduction: 11 million VND/month for yourself.
- Dependent deduction: 4.4 million VND/month/person.
- Compulsory insurance: Social insurance, health insurance, unemployment insurance according to actual contribution level.
- Charitable, humanitarian, and educational contributions (with valid documents).
Formula for determining taxable income:
|
Taxable income = Taxable income – Deductions |
Apply progressive tax schedule
After calculating taxable income, we apply the progressive tax schedule by month or by year (depending on the tax period). The progressive tax schedule in 2025 still maintains 7 levels, with tax rates from 5% to 35%. However, due to adjustments to family deductions, the net taxable income of many individuals will be lower than before, leading to a reduction in tax liability.
Personal income tax calculation formula
To accurately determine the amount of personal income tax payable, taxpayers need to apply a general formula based on taxable income, deductions and corresponding personal income tax rates for each level. General formula:
|
Personal income tax payable = (Taxable income – Deductions) × Progressive personal income tax rate |
In there:
- Taxable income: Total personal income received during the period, including salary, bonuses, allowances, commissions and other benefits.
- Deductions: Amounts subtracted from taxable income, helping to accurately reflect an employee's actual ability to pay taxes.
- Progressive personal income tax rate: Applied according to 7 tax levels, from 5% to 35%, the higher the income, the higher the tax rate.
Illustrative example
Suppose Mr. Minh is an office worker with a total income of 30 million VND/month, participates in compulsory social insurance of 10.5% (equivalent to 3.15 million VND/month) and has 01 dependent.
Step 1: Determine taxable income
Before calculating the personal income tax rate, the first important step is to determine taxable income. This is the basis for knowing which part of the income will be subject to tax, thereby applying the correct progressive tax schedule and legal deductions.
|
Taxable income = Total income – Deductions |
Mr. Minh's deductions include:
- Personal deduction: 11,000,000 VND/month
- Dependent deduction: 4,400,000 VND/month
- Compulsory insurance: 3,150,000 VND/month
|
Taxable income = 30,000,000 – (11,000,000 + 4,400,000 + 3,150,000) = 11,450,000 VND/month |
Step 2: Apply the progressive tax schedule
After determining taxable income in the previous step, the next step is to apply the progressive tax schedule to calculate the amount of personal income tax payable. This method helps the low income part to be subject to a small tax rate, the excess income part to be subject to a higher tax rate, ensuring the principle of fairness in the personal income tax rate system.
| Tax rates | Taxable income (million VND) | Tax rate | Tax payable (million VND) |
| 1 | first 5 | 5% | 0,25 |
| 2 | Next 5 | 10% | 0,50 |
| 3 | 1.45 remaining | 15% | 0,2175 |
| Total | 0.9675 million VND/month |
So the total personal income tax payable = 967,500 VND/month, correctly reflecting the actual personal income tax rate of the individual.
Step 3: Determine the actual tax rate
|
Actual tax rate = (Personal income tax payable / Total income) × 100% = (967,500 / 30,000,000) × 100% = 3.2% |
Personal income tax rates applicable to other income
In addition to income from salaries and wages, taxpayers may also generate other income such as business, real estate transfer, winnings or royalties. These incomes do not apply progressive tax schedules, but use fixed tax rates, making tax calculation simple, transparent and easy to manage.
| STT | Income type | Applicable tax rate | Illustrative example | Note/Meaning |
| 1 | Business income | 0.5% – 5% on total revenue | Small household business individual, revenue 100 million VND/year → tax payable 0.5 million VND | Fixed tax rates help clearly define tax obligations, avoiding complications when revenue changes |
| 2 | Income from real estate transfer | 2% on transfer price | Selling a house for 2 billion VND → personal income tax = 40 million VND | No progressive tax schedule applied, making procedures quick and transparent |
| 3 | Income from winnings | 10% on value exceeding 10 million/time | Winning the lottery 50 million VND → paying 4 million VND | Flat tax rates make event income easy to manage |
| 4 | Income from copyrights, intellectual property rights | 10% on total contract value | The author sold the book publishing rights for 200 million VND → paid 20 million VND | Ensure transparent declaration, avoid confusion with income from salary |
Important changes in personal income tax rates in 2025
In 2025, the personal income tax rate system in Vietnam will have some important adjustments, aiming to increase fairness, support low-income workers and ensure reasonable budget collection. Understanding these changes helps individuals and businesses declare taxes accurately, optimize tax obligations and avoid errors in finalization.
| STT | Content changes | Detail | Meaning |
| 1 | Increase family deduction level | Increase from 11 million VND/month (taxpayer) and 4.4 million VND/month/dependent | Support low-income workers, reduce actual taxes payable |
| 2 | Adjusting the progressive tax schedule | Tax brackets are adjusted to balance low and high incomes. | Increased equity, higher incomes subject to higher taxes but only on the excess |
| 3 | Fixed tax rates on other income | Unchanged but emphasized to apply to business, real estate transfer, winnings, copyrights | Simplify tax calculation, ensure transparency and ease of management |
| 4 | Legitimate deductions | Compulsory insurance, charitable, humanitarian and educational contributions are deductible before calculating tax. | Helps reduce taxable income, optimize actual personal income tax rate |
| 5 | Emphasize accurate reporting and settlement | Businesses and individuals must fully declare income and deductions. | Reduce the risk of fines and ensure compliance with the law |
Notes on applying personal income tax rates and final settlement
When declaring and settling personal income tax, mastering important notes is a key factor to ensure correct and complete tax calculation, avoid errors and optimize tax obligations. These notes are especially necessary when individuals or businesses have multiple sources of income, dependents or legal deductions. Below are points to note when applying personal income tax rates and tax settlement:
Identify the right type of income
Before calculating taxes, it is important to classify your income correctly. Income from wages and salaries will be subject to a progressive tax schedule, while other income such as business, real estate transfer, winnings or royalties will be subject to a flat tax rate.
Determining the correct type of income helps to accurately apply personal income tax rates and avoid declaring incorrect tax brackets, thereby minimizing the risk of being adjusted or fined by tax authorities.
Take advantage of legal deductions
Deductions play an important role in reducing taxable income and thus the actual tax rate payable. Deductions include:
- Family deduction for taxpayers.
- Deductions for dependents such as children, spouse, legal parents.
- Compulsory insurances such as social insurance, health insurance, unemployment insurance.
- Legal contributions: charity, humanitarian, education promotion (with legal documents).
By fully declaring these amounts, individuals will reduce the amount of tax payable while still complying with the law.
Control of documents and records
To ensure a transparent tax settlement process, it is necessary to keep all relevant documents and invoices. For example:
- Insurance receipt
- Invoices proving charitable and humanitarian contributions.
- Business contract or real estate transfer contract.
Keeping these records helps to accurately declare personal income tax rates, and reduces the risk of tax audits or inspections.
Calculate tax according to the correct progressive tax schedule
When income changes or dependents are added, taxable income also changes. Therefore, the tax payable must be recalculated based on the progressive tax schedule.
This helps ensure that individuals and businesses do not underpay or overpay taxes, and accurately reflects the personal income tax obligations of each individual.
Settlement period
The deadline for filing tax finalization dossiers is one of the most important factors when applying personal income tax rates. Filing on time not only helps individuals and businesses comply with the law, but also avoids risks of administrative fines and late payment interest.
- For individuals: People with income from multiple sources such as salary, bonus, business, winnings or copyright need to proactively summarize all income generated during the year. Finalization documents must be submitted completely, accurately and on time according to the regulations of the tax authority. This helps individuals determine the amount of personal income tax payable accurately and avoid penalties.
- For businesses: Businesses are responsible for summarizing all salaries, bonuses, allowances, and other income of employees, from which to prepare personal income tax settlement records. Late submission of records or incomplete or incorrect declarations will lead to: Administrative fines: according to the provisions of the Law on Tax Administration; Late payment interest: calculated on the amount of tax owed or late payment, directly affecting the business's finances.
Frequently Asked Questions (FAQ) on Personal Income Tax Rates
What income is subject to personal income tax?
Income subject to personal income tax includes salaries, wages, bonuses, allowances, commissions, business income, real estate transfers, winnings, copyrights and intellectual property rights, all of which must be declared and taxed according to the applicable personal income tax rate.
What deductions are available to reduce taxes?
Legitimate deductions include family deductions for taxpayers, deductions for dependents, compulsory insurances such as social insurance, health insurance, unemployment insurance, and charitable, humanitarian, and educational contributions with valid documents, helping to reduce taxable income and optimize actual personal income tax rates.
What personal income tax rates apply to real estate business and transfers?
Income from business is subject to a fixed tax rate of 0.51 TP3T to 51 TP3T on total revenue depending on the type, while income from real estate transfer is subject to a rate of 21 TP3T on the transfer price stated in the contract, making procedures simple and transparent.
When do I need to settle personal income tax and submit documents?
Individuals with multiple sources of income arising during the year and enterprises synthesizing salaries, bonuses, and allowances must submit tax settlement dossiers on time according to the regulations of the tax authority to avoid administrative fines or late payment interest, and at the same time ensure accurate declaration of personal income tax rates.
Conclude
Personal income tax rate is the key factor determining the tax liability of each individual and business. Mastering the progressive tax schedule, fixed tax rates for other incomes and legal deductions helps optimize tax liability and ensure compliance with legal regulations.
Correctly applying personal income tax rates not only helps individuals and businesses declare accurately but also reflects fairly in their financial obligations to the State. Detailed calculations of deductions, application of progressive tax schedules and fixed tax rates are especially important for individuals with multiple sources of income or large-scale businesses, helping to proactively manage finances and forecast future tax obligations.
Finally, compliance with the correct personal income tax rate brings long-term benefits, ensuring timely tax payment and facilitating tax settlement procedures. To declare accurately, optimize tax obligations and reduce legal risks, individuals and businesses can contact tax consulting services, tax accounting and audit of Master Accountant Network.
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
