Income calculation personal income tax This is the most important factor that all employees and accounting personnel need to master to ensure compliance with tax laws and regulations in 2026. Resolution 110/2025/UBTVQH15, The personal income tax policy has undergone significant changes with the increase in family allowance deductions and the adjustment of the progressive tax rate schedule from 7 brackets to 5 brackets, aiming to reduce the financial burden on people in the new economic context.
Accurately determining taxable personal income not only helps individuals manage their finances effectively but also assists businesses in optimizing payroll costs and avoiding errors during tax settlement periods. With the significant changes to Vietnam's tax legal system effective January 1, 2026, we need a deeper understanding of the process for determining taxable income, deductions, and applicable tax rates. Let's analyze this in detail with MAN – Master Accountant Network below.
What is taxable personal income and why is it important to determine it correctly?
Based on Personal Income Tax Law No. 109/2025/QH15, Taxable income for personal income tax purposes is the remaining income after deducting all legally permissible deductions from total taxable income. This figure is directly multiplied by the progressive tax rate to determine the final amount of tax that an individual must pay to the State budget monthly or annually.
Misunderstanding the nature of taxable personal income often leads to two contradictory consequences: underpaying taxes resulting in late payment penalties, or overpaying taxes causing economic harm. In today's digitized tax management environment, tax authorities can easily access data, therefore accuracy in calculation is a top priority for all accountants and professional tax consultants.
At what salary level does income begin to be subject to personal income tax?
Effective January 1, 2026, the tax threshold has been significantly raised. For resident individuals without dependents, taxable income will only become subject to personal income tax when total income from salaries and wages exceeds VND 15.5 million per month (equivalent to VND 186 million per year). This adjustment is based on the actual consumer price index (CPI) and the minimum living standard of workers.
Below is a table showing the income thresholds at which tax liability begins, based on the number of dependents:
| Number of dependents | Income threshold at which taxable income for personal income tax purposes begins (Million VND/month) | Note |
| 0 people | > 15.5 | Mandatory insurance has been deducted. |
| 1 person | > 21.7 | An increase of 6.2 million from zero people. |
| 2 people | > 27.9 | Suitable for a family of 2 children. |
| 3 people | > 34.1 | Upper middle income threshold |
| n people | > 15.5 + (nx 6.2) | General formula |
Therefore, if your income is lower than the thresholds mentioned above, your taxable income will be zero, and you will not have to pay tax.
The most accurate formula for determining taxable personal income.
To accurately calculate the amount of tax payable, taxpayers need to follow the legally mandated formula sequentially. Separating taxable income from deductions is a crucial step in determining taxable personal income. This process requires meticulous review of payroll documents and accompanying family deduction records.
General formula
According to Article 8 of the Personal Income Tax Law 2025, the formula for determining taxable personal income is established as follows:
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Personal income tax (PIT) taxable income = Taxable income – Deductions |
In this context, taxable income is understood as the total personal income received from the paying entity, minus any tax-exempt income. After obtaining this figure, we then subtract further amounts. personal deductions, Income from insurance and charitable activities is used to arrive at the final taxable income figure for personal income tax calculation.
Identify taxable income
Taxable income includes salaries, wages, allowances, and subsidies of a salary nature. However, to optimize taxable income for personal income tax purposes, accountants need to exclude the following non-taxable items:
- Meal allowance during shifts, lunch allowance (within the prescribed limit).
- Telephone and uniform allowances are provided according to company regulations.
- Actual travel expenses.
- Income from overtime and night work accounts for a significant difference.
The latest deductions from 2026.
Deductions act as a "shield" to lower taxable personal income. 2026 saw the highest level of personal deductions ever recorded:
- Personal deduction: 15.5 million VND/month.
- Dependent deduction: 6.2 million VND/month/person.
- Mandatory insurance: Social insurance (81 TP3T), health insurance (1.51 TP3T), unemployment insurance (11 TP3T).
- Contributions: Charity, humanitarianism, and promoting education.
The higher the total of these amounts, the smaller the remaining taxable income will be, helping employees save on tax costs.
The progressive tax rate schedule and how it is applied to taxable personal income.
A historic change in 2026 is the streamlining. progressive tax rate The tax brackets were gradually reduced from 7 to 5. This simplifies the process of calculating taxable income for personal income tax and lowers the tax rate for middle-income groups. Below is a detailed table of current tax rates applicable to resident individuals:
| Tax rates | Taxable income for personal income tax/month (Million VND) | Tax rate (%) | Quick calculation formula |
| 1 | Up to 10 | 5% | 5% x TNTT |
| 2 | Between 10 and 30 | 10% | (10% x TNTT) – 0.5 |
| 3 | Between 30 and 60 | 20% | (20% x TNTT) – 3.5 |
| 4 | Between 60 and 100 | 30% | (30% x TNTT) – 9.5 |
| 5 | Over 100 | 35% | (35% x TNTT) – 14.5 |
(Note: TNTT stands for Personal Income Tax)
Practical example of how to calculate taxable personal income in 2026.
Let's analyze the case of Ms. Minh (project manager): Gross salary 45 million VND, lunch allowance 730,000 VND, has 2 young children.
Step 1: Taxable income = 44,270,000 VND.
Step 2: Total deductions (Self + 2 children + Insurance 10.5%) = 32,625,000 VND.
Step 3: Taxable income = 44,270,000 – 32,625,000 = 11,645,000 VND.
Step 4: Personal Income Tax (Level 2) = (11,645,000 x 10%) – 500,000 = 664,500 VND.
Special considerations for digital technology personnel.
The 2025 Personal Income Tax Law adds significant incentives for digital technology professionals. Individuals working on AI and semiconductor chip projects may be exempt from tax for the first five years. For these individuals, even if they generate substantial revenue, their taxable income will be recorded as zero. This is a key policy aimed at encouraging talent and developing high technology in Vietnam in the coming years.
The role of tax advisory services from MAN – Master Accountant Network
Determining taxable personal income is complex due to the intertwining of numerous regulations. Using MAN's services helps review allowances, optimize deductions, and ensure accurate legal documentation. We help businesses stay up-to-date with the latest tax exemption and reduction policies according to the 2026 roadmap, avoiding the risks of tax audits or penalties from tax authorities.
Conclude
Taxable income for personal income tax purposes is the guiding principle for all tax declaration and payment activities of individuals in Vietnam. With the application of new deductions from 2026, workers are facing a great opportunity to increase their real income. However, this change also requires absolute accuracy in income classification to avoid unnecessary legal risks.
If you are having difficulty determining your taxable income, contact MAN – Master Accountant Network immediately. We provide solutions. auditing services, tax accounting, tax settlement and tax reporting In-depth expertise. With a team of experienced professionals, MAN is committed to providing peace of mind and optimizing sustainable financial benefits for our valued customers.
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
Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
Frequently Asked Questions about Taxable Personal Income
Yes. 13th-month bonuses and Tet (Lunar New Year) bonuses are added to taxable income to calculate personal income tax at the time of actual payment.
You are only entitled to the personal allowance deduction in one place. In all other places, your income will be the taxable income subject to direct deductions.
In that case, your taxable income is considered to be zero. You don't have to pay tax, and any surplus cannot be carried over to the next period. Are Tet bonuses included in taxable personal income?
I work in two places; how is my personal allowance calculated?
What happens if the taxable income for personal income tax is negative?
