Roadmap for applying Personal Income Tax Law in 2026: Update on the latest Law No. 109/2025/QH15

On December 10, 2025, the National Assembly passed the amended Law on Personal Income Tax (Law No. 109/2025/QH15) with many important changes regarding tax brackets, tax-exempt levels for business households, and the scope of taxable income. The roadmap for applying the 2026 Personal Income Tax (PIT) Law is a subject of special interest to many individuals and businesses in the context of significant changes to personal income tax policies. The following article will clarify the notable new points and the roadmap for applying Personal Income Tax Law (PIT Law) in 2026: Update on the latest Law No. 109/2025/QH15 according to the latest legal regulations.

Legal basis for applying Personal Income Tax Law from 2026

Previously, personal income tax was governed by the Law on Personal Income Tax 2007, amended and supplemented through the years: 2012, 2014, 2024, 2025. However, starting from 2026, the PIT legal system will transition to a new phase under the Law on Personal Income Tax No. 109/2025/QH15.

According to Article 29 of Law on Personal Income Tax No. 109/2025/QH15, the effectiveness of Law No. 109/2025/QH15 is as follows:

“1. This Law takes effect from July 1, 2026, except for the case prescribed in Clause 2 of this Article.

2. Regulations related to income from business, from salaries and wages of resident individuals apply from the tax period of 2026.”

This regulation leads to 2026 being a special transitional year, in which two PIT legal regimes exist in parallel depending on the timeline.

Update on roadmap for applying Personal Income Tax Law in 2026

The roadmap for applying the 2026 Personal Income Tax Law is as follows:

Period from January 1, 2026 to June 30, 2026

Apply the Law on Personal Income Tax 2007, amended and supplemented, and guiding documents.

From January 1, 2026 to June 30, 2026, the Law on Personal Income Tax 2007, amended and supplemented through the years 2012, 2014, 2024, 2025, is still applied. Along with it are the guiding documents for implementation including:

• Decree 117/2025/ND-CP regulating tax administration for business activities on e-commerce platforms and digital platforms of households and individuals.
• Decree 65/2013/ND-CP guiding the Law on Personal Income Tax and the Law amending and supplementing a number of articles of the Law on Personal Income Tax, amended and supplemented by Decree No. 91/2014/ND-CP, Decree No. 12/2015/ND-CP.
• Circular 92/2015/TT-BTC guiding the implementation of value-added tax and personal income tax for resident individuals with business activities.
• Circular 151/2014/TT-BTC guiding the implementation of Decree 91/2014/ND-CP amending and supplementing a number of articles at Decrees regulating taxes issued by the Minister of Finance.
• Circular 119/2014/TT-BTC amending Circular 156/2013/TT-BTC, Circular 111/2013/TT-BTC, Circular 219/2013/TT-BTC, Circular 08/2013/TT-BTC, Circular 85/2011/TT-BTC, Circular 39/2014/TT-BTC and Circular 78/2014/TT-BTC to reform and simplify tax administrative procedures issued by the Minister of Finance.
• Circular 111/2013/TT-BTC guiding the Law on Personal Income Tax and Decree 65/2013/ND-CP issued by the Minister of Finance.
• Circular 20/2010/TT-BTC guiding administrative procedures on personal income tax issued by the Ministry of Finance.

Important note: Enterprises must not apply the new regulations of Law 109/2025/QH15 early during this period. The declaration and deduction of PIT must still be performed according to old regulations, ensuring the correct tax period and avoiding errors during inspection and examination.

Applying Law on Personal Income Tax No. 109/2025/QH15 regarding income from business, salaries, wages

Although Law 109/2025/QH15 has general effect from July 1, 2026, specifically regulations related to income from business, from salaries and wages of resident individuals at Law on Personal Income Tax No. 109/2025/QH15 are applied from the tax period of 2026.

Accordingly, from January 1, 2026 (from the tax period of 2026), the non-taxable revenue threshold for PIT for business households and individuals is raised from 200 million VND/year to 500 million VND/year and this amount is allowed to be deducted before calculating tax based on the rate on revenue.

This regulation has great significance in reducing the tax burden and supporting small business households and individuals right from 2026, even though the law is not yet fully effective.

From July 1, 2026 onwards

From July 1, 2026, the Law on Personal Income Tax No. 109/2025/QH15 will officially take effect and be applied comprehensively.

Accordingly:

• Regulations at the Law on Personal Income Tax 2007, amended and supplemented as well as guiding documents for implementation will expire.
• All activities of tax calculation, deduction, declaration, and finalization of PIT are performed according to Law 109/2025/QH15.

Individuals, business households, and enterprises need to review internal processes to ensure compliance with new regulations.

Summary of some notable new points in Law on Personal Income Tax No. 109/2025/QH15

Law on Personal Income Tax No. 109/2025/QH15 is an important milestone, marking a comprehensive and positive innovation step in tax management policy in the reform period, clarifying the legal framework, reducing the tax burden for low-income individuals and small business households. Among them, there are some notable new points:

• Increase the non-taxable revenue threshold for PIT from 200 to 500 million VND;
• Raise the taxable threshold to 20 million VND for income groups calculated on a per-occurrence basis;
• Adjust the progressive PIT schedule from 7 brackets down to 5 brackets and widen the gap between brackets;
• Supplement family circumstance deduction levels according to Resolution 110/2025/UBTVQH15: For the taxpayer, it is 15.5 million VND/month; for each dependent, it is 6.2 million VND/month;
• Supplement taxable PIT incomes such as transfer of gold bars, digital assets, transfer of Vietnam national internet domain name “.vn”; transfer of greenhouse gas emission reduction results, carbon credits…;
• Supplement incomes exempt or reduced from PIT, in which tax exemption for wages for performing scientific, technological tasks, overtime work, working on holidays;
• Business households and individuals are allowed to deduct expenses to calculate tax like enterprises for annual revenue over 500 million VND/year.

What businesses need to prepare early before applying the new Personal Income Tax Law

• Update payroll software to meet the new tax calculation method;
• Build a plan to separate income data and withheld tax according to each period;
• Inform and disseminate to employees about the change in tax calculation method, especially for cases of high income or multiple income sources.

The 2026 PIT Finalization Challenge

A practical issue raised is: In 2026, two different laws apply, so how will tax finalization in 2027 be handled? Currently, Law 109/2025/QH15 does not have detailed guidance on the finalization method in the transition year; it is highly likely that income and tax will be separated by each period, instead of averaging the whole year.

Therefore, it is recommended that accountants and HR departments should:

• Archive salary, income, and withheld tax data clearly separated before and after July 1, 2026;
• Proactively monitor transitional guiding documents to adjust in a timely manner.

The roadmap for applying the 2026 Personal Income Tax Law according to Law No. 109/2025/QH15 shows that this is a pivotal year with many important changes, requiring individuals and enterprises to pay special attention to the application time and implementation method. Correct understanding and application of each period not only helps ensure legal compliance but also optimizes tax obligations and limits risks arising during the finalization process.

The above is information related to the roadmap for applying Personal Income Tax Law in 2026: Update on the latest Law No. 109/2025/QH15. Customers who have related questions or need tax advice, please contact Tax Agent – Viet An Law Firm for the best support!