Personal income tax rate Understanding tax rates and legal deductions is a top concern for individuals with income. In 2026, knowing the tax schedule and legal deductions is key to legal compliance and income optimization. Vietnam continues to apply a progressive tax system, with tax rates ranging from 5% to 35%. Individuals and businesses need to stay updated. Consolidated document No. 02/VBHN-BTC (04/01/2024) This is a directive from the Ministry of Finance to ensure accuracy in tax calculations for 2026. The current personal allowance is VND 11 million for the individual and VND 4.4 million for each dependent.
Overview of Personal Income Tax in Vietnam
Personal income tax is a direct tax levied on individual income during the tax period (salaries, business income, capital investments, etc.). Classifying taxpayers and income types is the most important step.
Taxpayers and classification of individuals as resident and non-resident
Before calculating personal income tax, the most important thing is to determine whether an individual is a resident or non-resident, as these two groups have completely different tax jurisdictions and tax rates. Accurate classification helps avoid incorrect declarations and ensures that tax obligations are fulfilled correctly according to regulations. Below are the criteria for identification and how to apply tax to each category.
- Resident individuals: Individuals who meet one of two conditions: being present in Vietnam for 183 days or more, or having a permanent residence. Resident individuals must pay tax on their global income, applying a progressive tax rate schedule.
- Non-resident individuals: These are individuals who do not meet the above conditions. Non-resident individuals only pay tax on income arising in Vietnam, applying a fixed personal income tax rate of 20% on taxable income from salaries and wages (Clause 1, Article 18, Circular 111/2013/TT-BTC).
Taxable income
Taxable income is the total personal income received, minus tax-exempt income. There are 10 main categories of taxable income, including: income from business, salaries, capital investments, capital transfers, real estate transfers, lottery winnings, royalties, franchise fees, inheritance, and gifts.
Updated current progressive personal income tax rate schedule (applicable for the 2026 tax year)
For resident individuals with income from salaries, wages, and business activities, the personal income tax rate is applied according to the progressive tax schedule with 7 brackets.
Details of the 7 tax brackets for personal income tax by month and year.
To accurately and fully calculate personal income tax, taxpayers need to have a firm grasp of both the legal framework and personal deductions, as these are the factors that determine the amount of tax payable or refundable. The regulations below summarize important legal documents and applicable deductions, helping individuals optimize their tax obligations according to standards.
| Tax rates | Taxable income/month (million VND) | Taxable income/year (million VND) | Tax rate (%) |
| Level 1 | Up to 5 | Up to 60 | 5% |
| Level 2 | Over 5 to 10 | Over 60 to 120 | 10% |
| Level 3 | Over 10 to 18 | Between 120 and 216 | 15% |
| Level 4 | Over 18 to 32 | From 216 to 384 | 20% |
| Level 5 | Over 32 to 52 | From 384 to 624 | 25% |
| Level 6 | Over 52 to 80 | Between 624 and 960 | 30% |
| Level 7 | Over 80 | Over 960 | 35% |
Progressive taxation method: The "divide and conquer" principle“
The progressive tax method divides taxable income into 7 brackets, each subject to a corresponding tax rate. The total tax payable is the sum of the taxes calculated for each bracket.
General formula
Example: If the Taxable Income (TA) is VND 35 million/month, the total tax payable is VND 5.50 million.
Quick formula for calculating personal income tax rate
This quick calculation formula helps determine the tax payable for each tax bracket without having to calculate each part individually:
| Tax bracket (i) | Taxable income/month (TNTT) | Tax rate (%) | Quick calculation formula (VND) |
| Level 1 | Up to 5 million | 5% | TNTT x 5% |
| Level 2 | Over 5 to 10 million | 10% | TNTT x 10% – 0.25 million |
| Level 3 | Between 10 and 18 million | 15% | TNTT x 15% – 0.75 million |
| Level 4 | Between 18 and 32 million | 20% | TNTT x 20% – 1.65 million |
| Level 5 | Between 32 and 52 million | 25% | TNTT x 25% – 3.25 million |
| Level 6 | Between 52 and 80 million | 30% | TNTT x 30% – 5.85 million |
| Level 7 | Over 80 million | 35% | TNTT x 35% – 9.85 million |
Legal basis and important personal deductions
To accurately and fully calculate personal income tax, taxpayers need to have a firm grasp of both the legal framework and personal deductions, as these are the factors that determine the amount of tax payable or refundable. The regulations below summarize important legal documents and applicable deductions, helping individuals optimize their tax obligations according to standards.
Current legal regulations (Laws, Decrees, Circulars)
The legal framework for personal income tax includes the Personal Income Tax Law (04/2007/QH12), Decree 65/2013/ND-CP, and Consolidated Document No. 02/VBHN-BTC (04/01/2024) of the Ministry of Finance. These documents provide detailed regulations on the application of personal income tax rates.
Personal allowances: The key to reducing personal income tax rates applicable in 2025.
Personal deductions are amounts deducted from taxable income before tax calculation, helping to reduce tax liability. The current deduction rates are applied according to Resolution No. 954/2020/UBTVQH14:
- Personal deduction amount: VND 11 million/month (VND 132 million/year).
- The deduction amount for each dependent is VND 4.4 million per month.
Registering dependents is a mandatory requirement to qualify for tax deductions and optimize personal income tax rates.
Other deductions besides personal allowances.
In addition to personal deductions, individuals are also entitled to the following deductions:
- Mandatory insurance contributions: Social insurance, health insurance, unemployment insurance as stipulated by law.
- Voluntary pension fund contribution: Maximum 1 million VND/month (12 million VND/year).
- Charitable, humanitarian, and educational donations: Must be made through licensed organizations and supported by valid documentation.
Conditions and procedures for registering dependents
Dependents must meet the requirements regarding age, employment status, and income level (not exceeding VND 1 million/month). Individuals must prepare a registration form and submit it to the paying agency or tax authority to be eligible for the deduction within the year. The application includes the declaration form and supporting documents.
Detailed steps for calculating personal income tax on salary and wage income applicable for the year 2026.
Income from salaries and wages is subject to personal income tax at a progressive rate. The calculation process consists of 3 steps:
Step 1: Determine Taxable Income
Taxable income is total income minus tax-exempt amounts (e.g., overtime pay, eligible meal allowances, preferential allowances for meritorious individuals).
Recipe:
|
Taxable income = Total income received – Tax-exempt income |
Step 2: Determine Taxable Income (TA) after deductions.
The TNTT (Tax Rebate) is the direct basis for applying the progressive personal income tax rate.
Recipe:
|
Total Taxable Income = Total Taxable Income – (Personal Deduction + Dependent Deduction + Other Deductions) |
Step 3: Apply the personal income tax rate and calculate the amount of tax payable.
After determining taxable income, apply the progressive tax rate schedule to determine the total personal income tax payable.
Here's a detailed example:
Mr. A (resident individual, 1 dependent) has a Gross Salary of VND 45 million/month as of August 2025.
- Total salary: 45,000,000 – 730,000 (Meal allowance) = 44,270,000 VND.
- Total Deductions: 11 million (personal) + 4.4 million (dependents) + 2.1 million (insurance) + 0.5 million (charity) = 18,000,000 VND.
- TNTT: 44,270,000 – 18,000,000 = 26,270,000 VND (Belongs to Tier 4).
- Tax payable (according to the quick calculation formula, Level 4): 26,270,000 x 20% – 1,650,000 = 3,604,000 VND.
Other types of income and fixed personal income tax rates.
Other sources of income are subject to a fixed personal income tax rate (%).
Income from personal business: Tax rate based on percentage (%)
Individuals engaged in business activities are subject to a fixed tax rate as a percentage (%) on their revenue (Circular 40/2021/TT-BTC). Revenue below VND 100 million/year is exempt from personal income tax and value-added tax.
| Business Sector/Industry | Personal Income Tax Rate (%) | VAT rate (%) | Total Tax Rate (%) |
| Distribution and supply of goods | 0.5% | 1% | 1.5% |
| Services, construction (excluding materials procurement) | 2% | 5% | 7% |
| Manufacturing, transportation, and services (including raw material procurement) | 1.5% | 3% | 4.5% |
| Other activities | 1% | 1% | 2% |
Income from capital investments, royalties, and franchise fees.
When compiling income for personal income tax settlement, each type of income has a completely different tax rate and calculation method. Understanding each tax correctly helps individuals avoid incorrect declarations and know their exact obligations to the tax authorities. Below is a quick summary table of common income types and their corresponding tax rates, applied according to current regulations.
| Income type | Personal Income Tax Rate | Tax basis |
| Capital investment | 5% | Taxable income |
| Copyright, Franchise (over 10 million VND/contract) | 5% | Income exceeding 10 million |
| Prizes, inheritances/gifts (exceeding 10 million VND per instance) | 10% | Income exceeding 10 million |
Income from real estate transfer
The fixed tax rate is 2% on the transfer price for each transaction.
Guide to Personal Income Tax Settlement: Obligations and Benefits
Personal income tax finalization is the process of consolidating and recalculating the amount of tax payable or refundable.
Who is responsible for final accounting and who is authorized to do so?
When approaching the personal income tax settlement period, the most frequently asked question is: who is required to self-settle their tax return, and who is allowed to authorize their employer to do so? Distinguishing between these two groups helps individuals avoid submitting incorrect documents, while significantly reducing administrative procedures for businesses. Below is a brief and easy-to-understand classification to help you accurately determine which group you belong to before settling your tax return.
- Individuals who directly file their tax returns: those with income from two or more sources, or those with overpaid/underpaid taxes, or those with income from abroad.
- Individuals authorized to file tax returns: Must have income from only one source (employment contract of more than 3 months), and must be working at that unit at the time of tax filing.
Procedures and deadlines for personal income tax finalization (Applicable for the year 2026)
The deadline for personal income tax settlement in 2025 is approaching, and both businesses and employees need to be aware of the deadlines and procedures to avoid errors or unnecessary penalties. In particular, the regulations from 2026 will continue to apply. Circular 80/2021/TT-BTC, Therefore, preparing the right documents and submitting them on time is extremely important. Below are the timelines and procedural requirements that you absolutely must know before filing your tax return.
- Deadline for Business Settlement: No later than March 31, 2026 (end of the third month after the end of the year).
- Deadline for Individuals to directly settle their accounts: No later than April 30, 2026 (end of the fourth month after the end of the year).
- Tax settlement procedure: Use form 02/QTT-TNCN (Circular 80/2021/TT-BTC) and submit online.
Cases eligible for tax refund (Note)
Individuals are eligible for a tax refund if:
- The amount of tax paid is greater than the amount of tax due (due to provisional payments or insufficient deductions).
- There is occasional income that has been subject to deductions (10%), but the total income after deductions is not high enough to be subject to tax.
Optimizing personal income tax rates and effective tax management strategies in the context of 2026.
In 2025, optimizing personal income tax and managing taxes effectively will be key for individuals and businesses. Strategies include converting allowances to legal status, fully registering dependents to receive the VND 4.4 million/person/month deduction, and making legitimate charitable contributions. Using online tax calculators helps to quickly and accurately estimate taxes and manage cash flow effectively. Adhering to Circular 111/2013/TT-BTC and Resolution 954/2020/UBTVQH14 helps reduce the risk of incorrect declarations, late payments, or lost documents, while optimizing legitimate tax benefits.
Optimizing taxable income
The optimal strategy includes:
- Conversion of allowances: Payment in tax-exempt forms (eligible meal allowances, clothing allowances in kind).
- Take advantage of the deduction: Ensure all eligible dependents are registered in a timely manner to receive the deduction of VND 4.4 million/person/month.
- Charitable contributions: Plan to make charitable or humanitarian contributions through legitimate organizations to qualify for tax deductions.
LSI: Calculating personal income tax online and applying technology.
Using online personal income tax calculators helps individuals and accountants estimate their tax quickly and accurately based on progressive tax rates and current deductions, supporting effective cash flow management.
Risks and solutions for personal income tax compliance.
Common risks include late filing, incorrect declarations (incorrect taxable income or deductions), and failure to retain supporting documents. The solution is to use professional tax accounting services and strictly adhere to legal regulations, from Circular 111/2013/TT-BTC to Resolution 954/2020/UBTVQH14.
Conclude
In 2026, the progressive personal income tax rate (from 5% to 35%) will remain an important tool for regulating income. Accurately applying the personal allowance of VND 11 million (for the individual) and VND 4.4 million (for dependents) is fundamental to fulfilling tax obligations. Accurate tax settlement is not only a responsibility but also helps individuals receive refunds for any overpaid taxes.
Given the complexity of the tax system, seeking professional assistance is essential. MAN – Master Accountant Network provides this service. auditing services, tax accounting We offer in-depth consultation to help individuals and businesses accurately and legally calculate, declare, and settle personal income tax, ensuring optimal personal income tax rates. Contact MAN today for expert advice.
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.
