2025 Salary Paid in Jan 2026: Which PIT Deduction Rate Applies in Vietnam?

From January 1st, 2026, the reduction based on family circumstances will be applied according to new regulations: 15.5 million VND per month for taxpayers and 6.2 million VND per month for each dependant. Viet An Law has received many questions regarding 2025 salary paid in Jan 2026: Which PIT deduction rate applies in Vietnam? Viet An Law will now advise and answer this question for our clients.

2025 salary paid in Jan 2026: Which PIT deduction rate applies in Vietnam?

Based on Article 2, Resolution 110/2025/UBTVQH15, the effective date is stipulated as follows:

“This Resolution comes into force from January 01, 2026 and is applied from the tax period of 2026.”

At the same time, Clause 8, Article 4, Law on tax administration 2025 stipulates:

“The tax period and the period for calculating other revenues means a period of time used to determine tax liabilities and other that must be paid towards the state budget in accordance with provisions on taxation, tax administration, and other relevant legal regulations, including periods for each occurrence, monthly, quarterly, annually, or settlement periods.”

Therefore, the time of determining taxable income for salaries and wages is the time when the organization or individual pays the taxpayer.

Therefore, when enterprises pay salaries for December 2025 and 13th-month bonuses for the previous year in 2026, these incomes will be taxable income from the 2026 tax year, and the new personal income tax deduction rate according to Resolution 110/2025/UBTVQH15 (effective from January 1, 2026) will apply.

Reduction based on family circumstances from January 1, 2026

According to Clause 1, Article 19, Law on personal income tax 2007, amended by Clause 4, Article, Law on personal income tax 2012, reduction based on family circumstances is the amount of money deducted from the taxable income before calculating tax on incomes from business, or wages earned by the resident taxpayer.

Reduction based on family circumstances consists of:

• Reduction for the taxpayer;
• Reduction for each dependant of the taxpayer.

The reduction based on family circumstances stipulated for each period are applied as follows:

Therefore, according to current regulations, from January 1, 2026, based on Article 1, Resolution 110/2025/UBTVQH15, the reduction based on family circumstances will continue to be adjusted as follows:

• Reduction for the taxpayer, which is 15,5 million VND/month (186 million VND/year);
• Reduction for each dependant of the taxpayer, which is 6,2 million VND /month.

Reduction based on family circumstances from January 1, 2026

Accordingly, when enterprises pay salaries/bonuses to employees after January 1, 2026, the tax deduction for personal income tax on these payments will be calculated according to the newly applied rate, increasing reduction based on family circumstances by nearly 41% compared to the reduction before 2026.

The new reduction based on family circumstances in Resolution 110/2025/UBTVQH15 is based on the growth rate of average per capita income and average per capita GDP from 2020 to the present (approximately 40-42%). The application of this increased reduction based on family circumstances is expected to contribute to a greater reduction in tax obligations for taxpayers compared to adjustments based on the CPI index, helping people benefit from socio-economic development.

How to calculate taxed income from salaries and wages

According to Clause 1, Article 7, Circular 111/2013/TT-BTC, amended by Clause 6, Article 25, Circular 92/2015/TT-BTC, the method for calculating personal income tax on income from salaries and wages is as follows:

PIT = Taxed income x Tax rate

Including:

Taxed income = Taxable income – (Reduction based on family circumstances + Insurance contributions, voluntary retirement funds + Reduction for charity or humanitarian donations)

How to calculate taxed income from salaries and wages

The personal income tax rates for income from business activities, salaries, and wages are applied according to the progressive tax rate schedule stipulated in Article 22, Law on personal income tax 2007 as follows:

Thus, personal income tax on income from salaries and wages is the total tax calculated according to each income grade. The tax calculated according to each income grade is equal to the taxed income of that grade multiplied by the corresponding tax rate of that grade.

For convenience in calculation, the simplified calculation method according to Appendix No. 01/PL-TNCN issued with Circular 111/2013/TT-BTC can be applied as follows:

Note how to identify dependant for reduction based on family circumstances

Individuals considered as dependants

According to Clause 3, Article 19, Law on personal income tax 2007, dependants of a taxpayer means persons a taxpayer is responsible for nurturing or taking care of, including:

• His/her minor children or disabled children who are incapable of working;
• Individuals who have no income or have incomes not exceeding the prescribed level, including adult children who are studying at a university, college, professional secondary school or job-training establishment; his/her spouse who is incapable of working; his/her parents who are beyond the working age or incapable of working; other supportless persons whom the taxpayer has to directly nurture.

Principles for determining dependants

According to point c.2, clause 1, Article 9, Circular 111/2013/TT-BTC, the determination of dependants must ensure the following principle:

• The taxpayer may make deductions for his or her dependants if the taxpayer has applied for tax registration and been issued with the tax code;
• When registering deductions for dependants, the taxpayer shall be issued with tax codes for dependants and make preliminary deductions in the year from the registration date;
• If the taxpayer has not made deductions for dependants in the tax year, the deductions for dependants shall be made from the month in which the custody is given when the taxpayer settles tax and registers deductions for dependants;
• The deduction for a dependant shall apply to only one taxpayer in the tax year. Where multiple taxpayers have the same dependant to provide for, they shall reach an agreement on the person that makes the deduction for such dependant.

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