The 2026 progressive personal income tax schedule is a core element in the tax system reform roadmap, in line with the amended Personal Income Tax Law, and is expected to take effect on January 1, 2026. The adjustment from the current 7 tax brackets to 5 is not merely a change in numbers but a major turning point in income regulation policy, aiming to ensure fairness and alignment with economic growth and fluctuations in the consumer price index (CPI).
In the accounting and auditing field, mastering the 2026 progressive personal income tax schedule is crucial for businesses to proactively develop human resource plans and payroll budgets. According to the latest draft laws, the tax rate structure between brackets will be widened, easing the financial burden on middle- and upper-middle-income workers. This simultaneously presents a more complex tax management challenge for accountants in monthly tax settlements and declarations.
Legal context and implementation roadmap of the 2026 progressive personal income tax rate schedule.
The 2026 progressive personal income tax schedule was developed in the context of Vietnam's accelerated reform of the tax system towards simplification, transparency, and greater alignment with real-life practices. Based on a comprehensive review of the current Personal Income Tax Law and its amendments, the State aims to streamline the tax schedule and make adjustments. personal allowance and reduce the compliance burden for taxpayers. 2026 is considered a suitable timeframe for implementation, aiming to meet the requirements of macroeconomic stability and adapt to fluctuations in the cost of living after the recovery period.
Basis for promulgating and amending the Personal Income Tax Law
The changes to the 2026 progressive personal income tax rate schedule are based on a comprehensive review. Personal Income Tax Law No. 04/2007/QH12 and subsequent amendments and supplements to the Laws. The Government recognized that the current 7-tier tax system was too complex, making management and calculation difficult. Reducing it to 5 tiers helps align with international trends and reduces compliance costs for taxpayers.
Why 2026?
2026 marks a crucial phase in the tax system reform strategy until 2030. The implementation of a progressive tax rate schedule is a key objective. personal income tax The year 2026 helps address the inadequacy of the current personal allowance compared to the actual cost of living. Tax experts consider this a "golden" opportunity to stabilize the macroeconomic economy after the post-pandemic recovery period.
Details of the 2026 Progressive Personal Income Tax Rate Schedule (5 new brackets)
Below is a detailed data table comparing the old tax schedule and the 2026 progressive personal income tax schedule for easy reference by businesses and individuals.
| Tax rates | Taxable income/month (Old) | Taxable income/month (2026 – Projected) | Tax rate |
| 1 | Up to 5 million VND | Up to 10 million VND | 5% |
| 2 | Over 5 to 10 million VND | Between 10 and 30 million VND | 10% |
| 3 | Between 10 and 18 million VND | Between 30 and 60 million VND | 15% |
| 4 | Between 18 and 32 million VND | Over 60 to 100 million VND | 25% |
| 5 | Between 32 and 52 million VND | Over 100 million VND | 35% |
| 6 | Between 52 and 80 million VND | – (Included in level 5) | – |
| 7 | Over 80 million VND | – (Included in level 5) | – |
Based on the table above, we can see that the 2026 progressive personal income tax schedule has significantly widened the gap between income brackets. This helps individuals with incomes from 10 to 30 million VND/month reduce their tax liability thanks to the application of the second tax bracket rate to a wider income range.
Analyzing changes in the taxable income threshold.
In the 2026 progressive personal income tax schedule, the first income bracket is proposed to be raised to 10 million VND. This change means that the majority of low-income workers will directly benefit. This is clear evidence of the goal of ensuring social security and stimulating domestic consumption through taxation.
How to calculate personal income tax according to the new tax schedule of 2026.
The calculation based on the 2026 progressive personal income tax schedule still adheres to the principle of calculating based on each portion of income corresponding to each tax bracket. The general formula remains:
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Personal income tax payable = Taxable income x Corresponding tax rate. |
However, due to changes in tax brackets, accountants need to update their software and cumulative calculation methods to avoid errors.
Formula for determining taxable income
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Taxable income = Taxable revenue – Deductions |
These deductions include personal deductions (for the individual and dependents), mandatory insurance contributions, and charitable and humanitarian contributions. With the 2026 progressive personal income tax schedule, businesses should note that the expected personal deduction amount will also be adjusted upwards accordingly.
Real-life examples
Suppose an individual has a taxable income of 45 million VND/month after deductions. According to the old tax schedule, this individual belonged to bracket 4 (25%). However, with the 2026 progressive personal income tax schedule, 45 million VND falls only into bracket 3 (15%).
Tax payable according to the new schedule:
- Level 1: 10 million x 5% = 0.5 million.
- Level 2: (30 – 10) million x 10% = 2 million.
- Level 3: (45 – 30) million x 15% = 2.25 million. Total: 4.75 million VND.
Compared to the previous rates, workers save a significant amount of tax thanks to the application of the 2026 progressive personal income tax rate schedule.
The impact of the 2026 progressive personal income tax rate schedule on employees.
The 2026 progressive personal income tax schedule is expected to have a direct positive impact on the income and morale of workers. Adjusting the number of tax brackets, widening the tax brackets, and raising the threshold for applying higher tax rates aims to reduce the financial burden on middle-income earners while increasing the attractiveness of the market for high-quality labor. Therefore, the new policy not only protects the real income of salaried workers but also contributes to improving the quality of human resources and the competitiveness of the labor market.
Reducing financial pressure on middle-income groups.
Widening the tax brackets in the 2026 progressive personal income tax schedule helps mid-level employees in businesses feel secure in their jobs. When their income increases due to salary increases or bonuses, they are not forced to jump too quickly to higher tax brackets (20%, 25% as before), thereby preserving their actual income (take-home pay).
Encouraging highly skilled labor
For senior personnel, consolidating the highest tax brackets in the 2026 progressive personal income tax schedule creates transparency. Although the maximum tax rate remains at 35%, the threshold for applying this rate has been raised (above 100 million instead of above 80 million). This contributes to attracting and retaining talented experts and managers both domestically and internationally.
Responsibilities of the Accounting and Tax Department regarding the new policy.
The implementation of the 2026 progressive personal income tax rate schedule places new demands on the accounting and tax departments within businesses. Beyond simply complying with regulations, accountants need to proactively prepare payroll systems, update operational procedures, and act as a bridge for information between tax policies and employees. This readiness and timely communication will help businesses transition smoothly, minimize errors, and strengthen employee trust.
Update the payroll system.
Starting from the end of 2025, accountants need to prepare the technological infrastructure to integrate the 2026 progressive personal income tax schedule. Tax calculation algorithms in Excel or ERP software must be thoroughly checked against the regulations of the new guiding circular to ensure absolute accuracy in the January 2026 payroll period.
Internal counseling and communication for employees.
Accountants not only handle data but also play a consulting role. Clearly explaining the benefits of the 2026 progressive personal income tax rate schedule will help employees understand the government's policy correctly, reduce confusion about tax deductions on monthly payrolls, and create consensus within the company.
Why do businesses need professional auditing and tax accounting services?
In the context of constantly changing tax policies, especially with the introduction of the 2026 progressive personal income tax rate schedule, the risk of errors in tax declaration and settlement is very high. These errors not only lead to back taxes and late payment penalties but also affect the reputation and legal compliance ranking of businesses.
Audit and tax accounting services from professional organizations like MAN – Master Accountant Network will help businesses:
- Review all tax records to ensure compliance with the 2026 Progressive Personal Income Tax Rate Schedule.
- Optimize corporate and personal income tax costs through legally sound compensation and compensation structure consulting solutions.
- Business representatives work with tax authorities, explaining data in a professional and logical manner.
Conclude
The 2026 progressive personal income tax schedule serves as a "guide" for tax settlement activities in the new phase. With the reduction from 7 to 5 tax brackets, this policy brings a breath of fresh air to the labor market, helping to alleviate the tax burden for the vast majority of people. However, this change also requires thorough preparation from businesses to ensure the smoothest transition possible.
To ensure your business stays ahead in compliance and maximizes the benefits of the 2026 Progressive Personal Income Tax Rate Schedule, contact MAN – Master Accountant Network today. We pride ourselves on being a leading network of auditing experts., tax accounting and tax consulting, We are committed to providing safe, effective, and sustainable solutions for our clients' development.
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 the 2026 Progressive Personal Income Tax Rate Schedule
This applies to resident individuals with income from salaries and wages. For non-resident individuals, the tax rate remains fixed (usually 20%) as per current regulations; this 5-tier progressive tax rate schedule does not apply.
According to the revised Personal Income Tax Law, the personal and dependent allowance is expected to be increased to align with the 2026 progressive personal income tax rate schedule, ensuring that the actual taxable income threshold accurately reflects living expenses.
Businesses should restructure allowances and subsidies that are not included in taxable income and make the most of deductible welfare expenses, working closely with tax consultants like MAN to develop optimal compensation policies. Which subjects are covered by the progressive personal income tax rate schedule for 2026?
Will the personal allowance change along with the 2026 progressive personal income tax rate schedule?
How can businesses optimize their tax compliance when the new tax schedule is implemented?
