Family deduction is an important factor in determining personal income tax, helping to reduce tax obligations in a reasonable and legal manner. This article provides full information on the concept, calculation, documents, conditions and mistakes to avoid when applying family deduction in year-end tax settlement.
What is family deduction? Legal basis and meaning
Family deduction is an amount deducted from taxable income when calculating personal income tax (PIT). This amount applies to the taxpayer himself and the subjects that he is obliged to support (dependents).
Legal basis:
- Personal Income Tax Law 2007 (amended and supplemented 2012)
- Circular 111/2013/TT-BTC
- Resolution 954/2020/UBTVQH14 on adjusting family deduction levels
Family deductions help determine more closely an individual's actual tax-paying ability, ensuring fairness in the application of tax policies.
Latest family deduction level 2025
As of July 2025, the family deduction is still being applied according to Resolution 954/2020/UBTVQH14:
- Taxpayer: 11 million VND/month (132 million VND/year)
- Dependents: 4.4 million VND/month/person
In 2025, there is no official proposal or document on changing the family deduction level. However, in the context of inflation and proposals from some delegates, taxpayers should closely update information from the Ministry of Finance and the General Department of Taxation.
How to calculate family deductions according to current regulations
Formula for calculating taxable income:
Taxable income = Gross income – Personal deductions – Dependent deductions – Other deductions (insurance, gifts…)
For example:
- Mr. Nam earns 20 million VND/month, raising 2 children.
- Deduction calculation: 11 + 4.4 x 2 = 19.8 million VND
- Taxable income: 20 – 19.8 = 0.2 million VND (not yet taxable threshold)
Note: Deductions can be calculated monthly or annually, but must be registered and recorded by the tax authorities.
Conditions for family deduction
To be eligible for family deductions, taxpayers need to meet a number of basic conditions, which are divided into two groups: personal deductions and deductions for dependents.
For me, the most important condition is that the taxpayer must have a personal tax code and is generating taxable income from salary, wages, business activities or other sources of income subject to personal income tax. Having a tax code is not only a technical requirement but also a basis for the tax authority to identify valid taxpayers and monitor declarations in accordance with regulations.
For dependents, the conditions for approval are somewhat stricter. First of all, the relationship between the taxpayer and the dependent must be clearly demonstrated through the household registration book or other legal documents showing the obligation to support. At the same time, the dependent must have no income or have income but not exceeding 1 million VND per month. In particular, a dependent is only counted for one taxpayer in the same year, even if there are many people supporting him/her (for example: elderly parents, young children, etc.).
The starting point for the deduction is calculated from the month in which the obligation to support arises, provided that the registration dossier has been completed and accepted by the tax authority. If the registration is late, the taxpayer must fully demonstrate the basis for retrieving the deduction from the valid time.
Dependent registration form for deduction
First time registration:
- Form 20-DK-TH-TCT
- Birth certificate, ID card, household registration book, income declaration of dependents (if any)
- Register directly at the tax office or through the portal. https://thuedientu.gdt.gov.vn
When updating/stopping:
- Change declaration
- Explanation of change of status
- If registering late, there must be sufficient supporting documents to trace the impact back to the beginning of the year.
How old are parents to get family deduction?
Age is not a deciding factor. As long as parents:
- No pension or income to tax
- Identified as a qualifying dependent
However, see also Decree 135/2020/ND-CP about retirement age:
- 2025: men 60 years and 3 months old, women 55 years and 4 months old
How to determine the time to calculate dependent deductions
Determining the time to start applying family deductions for dependents not only affects the amount of tax payable but also determines the taxpayer's rights in each tax period.
Under current regulations, if the taxpayer completes the registration of dependents before December 31 of the year in which the obligation to support arises, the deduction will be calculated from the first month of the obligation to support. This is a mechanism to ensure full benefits for taxpayers, as long as the dossier is valid and received by the tax authority on time.
In case the dependent is registered after December 31, the deduction will start from the month of filing the tax return. This means that the taxpayer will not be able to reclaim the deduction for previous months, unless there is sufficient supporting documentation and written approval from the tax authority.
For situations that arise late or have errors in the declaration, taxpayers can still supplement the documents during the year-end tax settlement period. If the documents prove sufficient legal basis (such as birth certificates, certificates of support obligations, income documents, etc.), the tax authority can allow the recovery of the deduction benefit from the first eligible month.
Common mistakes when registering for family deductions
Registering for family deductions seems simple, but in reality, many taxpayers have encountered problems due to small errors in the records or declaration process. One of the most common errors is declaring duplicate dependents between spouses, especially when both work at different units. According to regulations, a dependent can only be deducted for one taxpayer in the same year, so if not agreed upon from the beginning, it is easy to lead to errors when finalizing.
Additionally, many taxpayers fail to update their dependents’ information when their status changes—for example, when a child becomes eligible to earn income, or a parent begins receiving a pension. Failure to make timely adjustments can result in incorrect deductions, which can result in back taxes and even penalties if the claim is determined to be a deliberate misstatement.
Another common mistake is not keeping adequate supporting documents when the tax authority conducts an audit. Many people only submit copies, not keeping the originals or do not have documents proving valid support obligations. This makes verification difficult, causing disadvantages for the taxpayers.
Finally, some cases, even though they registered late, still want to have their deductions retrospectively deducted from the beginning of the year, but Failure to submit additional valid documentsIf there is no clear basis for the time when the obligation to support arises, the tax authority will refuse to allow retrieval and only calculate from the month of declaration.
Conclusion and recommendations
Family deduction is a humane tax policy, aiming to adjust the tax obligations of individuals based on the actual circumstances of income and responsibility to support relatives. This deduction not only helps to minimize the amount of tax payable but also accurately reflects the financial capacity of taxpayers, thereby ensuring fairness in the application of personal income tax law.
However, to fully enjoy the benefits, individuals need to clearly understand the applicable conditions, prepare complete documents and register on time according to the instructions of the tax authorities. Delays, incorrect declarations or lack of legal basis can lead to tax arrears or loss of deduction benefits for the entire year.
During the tax declaration or settlement process, if you need assistance in reviewing documents, registering dependents or determining the correct time to receive deductions, please contact our team of experts. Master Accountant Network (MAN)We are ready to accompany you to ensure legal declaration, correct benefits and avoid unnecessary risks.
Contact Information Master Accountant Network – MAN
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile / Zalo: 0903 963 163 – 0903 428 622
- E-mail: man@man.net.vn
Interested readers can learn more about full accounting service or Personal income tax settlement service for advice and support as needed.
References: The article references legal information from LuatVietnam.vn – What is family deduction?
