Vietnam's 5-bracket PIT schedule and family deductions: how to calculate and optimise lawfully

The short answer

PIT Law No. 109/2025/QH15 takes effect on 1 July 2026, with implementing guidance in Decree No. 253/2026/ND-CP. For residents' employment and business income, the new rules apply to the whole 2026 tax year. The main changes:

• The progressive schedule is cut from 7 to 5 brackets: 5%, 10%, 20%, 30% and 35%, with wider bands (VND 10 – 30 – 60 – 100 million a month).

• Family deductions: VND 15.5 million a month for the taxpayer (VND 186 million a year) and VND 6.2 million a month per dependant.

• The threshold for per-payment income, such as prizes, royalties, franchising, inheritances, gifts and other income, rises from VND 10 million to VND 20 million.

According to general assessments, every taxpayer in the current brackets pays less tax.

The 5-bracket schedule and quick formulas

Bracket	Monthly assessable income	Rate	Quick formula
1	Up to VND 10 million	5%	5% × AI
2	Over VND 10 to 30 million	10%	10% × AI – VND 0.5 million
3	Over VND 30 to 60 million	20%	20% × AI – VND 3.5 million
4	Over VND 60 to 100 million	30%	30% × AI – VND 9.5 million
5	Over VND 100 million	35%	35% × AI – VND 14.5 million

Assessable income (AI) is taxable income less family deductions, compulsory insurance contributions and other prescribed deductions.

Old versus new: a worked comparison

Mr A earns a gross salary of VND 40 million a month and supports one child. Compulsory insurance contributions are assumed to be VND 4.2 million.

Item	Old law (7 brackets; deductions of VND 11m and 4.4m)	New law (5 brackets; deductions of VND 15.5m and 6.2m)
Assessable income	40 – 4.2 – 11 – 4.4 = VND 20.4 million	40 – 4.2 – 15.5 – 6.2 = VND 14.1 million
Bracket	Bracket 4 (20%)	Bracket 2 (10%)
Monthly tax	20% × 20.4 – 1.65 = VND 2.43 million	10% × 14.1 – 0.5 = VND 0.91 million
Difference		About VND 1.52 million less per month

What should employers do?

1. Update payroll software for the new schedule and deductions.

2. Deal with 2026 differences: the new rules apply to the whole 2026 tax year. Employers that withheld under the old rules in the early months need to adjust at finalisation, or as directed by the tax authority's transitional guidance.

3. Review dependant registrations for employees. Many have not registered all their dependants.

4. Communicate the changes to employees, to avoid questions when take-home pay changes.

5. Review "net" salary arrangements for foreign staff and managers: when tax falls, the employer's gross-up cost changes too.

Lawful PIT planning: what employees and employers can do

Approach	What it involves	Notes
Register all eligible dependants	Children, parents, spouses and others who meet the conditions	Each dependant can be claimed by only one taxpayer
Use exempt and excluded income	For example, the overtime premium above normal pay, and certain allowances and benefits as prescribed	Must meet the conditions and limits in Decree No. 253/2026/ND-CP
Charitable, humanitarian and educational donations through qualifying organisations	Deductible when calculating tax	Receipts from the recipient organisation are required
Voluntary pension insurance and supplementary pension funds	Deductible within prescribed limits	Check limits and qualifying products
New deductions under the new law	The new law adds certain deductions, detailed in Decree No. 253/2026/ND-CP	Check the specific conditions before applying

Avoid: splitting income among several people, signing sham service contracts to withhold a flat 10% instead of progressive rates, or paying cash off the books. These are easily treated as tax evasion, especially now that the tax authority links personal identity and cash flow data.

FAQs

When does the 5-bracket schedule apply?

The 2025 PIT Law takes effect on 1 July 2026. The rules on residents' employment and business income apply to the whole 2026 tax year.

At what salary does PIT start?

For a taxpayer with no dependants, tax starts once taxable income after compulsory insurance exceeds VND 15.5 million a month. Each dependant raises that threshold by VND 6.2 million a month.

What is the top rate?

Still 35%, on assessable income above VND 100 million a month.

What does the VND 20 million threshold apply to?

To per-payment income such as prizes, royalties, franchising, inheritances, gifts and certain other income.

Legal basis

• PIT Law No. 109/2025/QH15 (Articles 9 and 10).

• Decree No. 253/2026/ND-CP detailing the PIT Law (replacing Decree No. 65/2013/ND-CP).

• Resolution No. 110/2025/UBTVQH15 on family deductions.

• Law on Tax Administration No. 108/2025/QH15.

How W&A can help

PIT changes affect every employee and the employer's people costs. W&A supports businesses with:

• Updating payroll and PIT withholding processes under the new law, including the 2026 transition.

• Reviewing remuneration structures and lawful exemptions and deductions.

• PIT finalisation for employers and individuals.

• In-house training for HR and finance teams on the 2025 PIT Law.

• Advice on net and gross salary policies for foreign staff and managers.