Vietnam’s Personal Income Tax Shake-Up: New Rates, Bigger Deductions, Clearer Rules

Vietnam’s tax reform has moved from theory to real life. The country is rolling out an updated personal income tax system that cuts down the number of tax brackets while simultaneously increasing deductions. The revised personal income tax framework was approved by Vietnam’s National Assembly on December 10, 2025, with implementation split into several stages. Some provisions take effect on January 1, 2026, while the system in its full form is scheduled to go live on July 1, 2026.

The reform does not change the base or maximum tax rates, but rather changes the way the scale works internally. The system will now operate on five tax levels rather than seven in an effort to simplify computations and establish clearer thresholds. Also, more and more money is going to be considered taxable. The inclusion of digital asset and e-commerce transactions in the tax base more accurately reflects the current state of the economy than its appearance a decade ago. The government is also sending a message that the reform is for more than simply collecting taxes; it's also about guiding behavior and bolstering key areas of development by giving targeted incentives for economically significant industries in tandem with this expansion.

Vietnam’s New Personal Income Tax Rollout: Dates, Deadlines, and the In-Between Months

Real-world payroll and accounting are being considered throughout the rollout of Vietnam's income tax change. A two-stage launch, instead of a hard switch, is established by the legislation that was approved on December 10, 2025. A five-tier tax scale will replace the previous system and larger standard deductions will be applicable beginning on January 1, 2026. These are the major changes. July 1, 2026, will see the complete implementation of the package, which includes the broader definition of taxable income as well as incentive programs tailored to certain sectors of the economy.

That design creates a clear transition window in the first half of 2026. Employers will be busy recalibrating payroll systems, updating internal policies, and revisiting employment contracts and bonus rules to match the new rates and deductions. Payroll software gets reworked in parallel, with new logic for withholding and reporting. Tax authorities are doing their own upgrades too—adjusting control procedures, fine-tuning automated systems, and issuing guidance for gray areas, especially cases where income is accrued before January 1 but paid after the new rules start.

Vietnam’s Income Tax Gets a Cleaner Shape: Seven Brackets Out, Five Left Standing

Vietnam’s tax reform zeroes in on one core issue: the structure of personal income tax. The new PIT scale replaces the old seven-tier system with a tighter five-bracket model. Under the previous setup, seven different rates created too many thresholds, made calculations messy, and produced sharp jumps when income crossed from one band into the next. The revised structure keeps the system progressive, but strips away a lot of that friction.

What hasn’t changed is just as important as what has. The minimum rate stays at 5%, and the top rate remains 35%. In other words, the reform isn’t about squeezing higher earners harder. It’s about redrawing the income ranges, smoothing the thresholds, and making the system easier to apply in real payroll and reporting scenarios. For investors, employers, and professionals, this sends a clear signal: Vietnam is refining how tax works, not abruptly increasing the overall burden.

Vietnam’s Updated Personal Income Tax Brackets: Fewer Levels, Clearer Logic

As part of the reform, Vietnam has reshaped its personal income tax system around a simpler set of five monthly income brackets:

• up to VND 10 million — 5%
• VND 10–30 million — 10%
• VND 30–60 million — 20%
• VND 60–100 million — 30%
• over VND 100 million — 35%

The new structure keeps the tax system progressive, but removes unnecessary complexity. With fewer thresholds and wider income bands, the rules are easier to understand and apply, especially for employers managing large payrolls and for foreign specialists navigating the system for the first time. The wider ranges also reduce sharp jumps in tax liability when income increases slightly.

In practice, the mechanics stay intuitive. Income within the VND 30–60 million range is taxed at 20%, and only the portion exceeding VND 60 million moves into the 30% bracket. The same logic applies at the top end: the 35% rate affects only income above VND 100 million per month, covering a relatively small group of high earners such as executives, business owners, and top-tier professionals. Overall, the reform keeps Vietnam’s personal income tax competitive, predictable, and easier to work with.

Higher Standard Deduction and Larger Allowance for Dependents

The tax base itself has a lot more to do with how Vietnam's new personal income tax functions than the rates do. The legislation purposefully turns the emphasis to enlarging the part of income that isn't taxed at all by raising both the standard deduction and the dependent allowance. Because of this, a lot of workers and families in Vietnam have a smaller taxable base for PIT.

Standard deduction: from VND 11 million to VND 15.5 million

The basic reduction every month has gone up from VND 11 million to VND 15.5 million. This amount is now immediately taken out of every taxpayer's taxed income. This is the most important change for most workers. A bigger standard deduction means that a bigger chunk of income doesn't get taxed at all.

In practical terms, this reduces the real tax burden for the majority of salaried workers, especially those earning up to VND 30–40 million per month. Take a monthly income of VND 25 million as an example. Tax is no longer calculated on the full amount, but only on the difference between income and the deduction. The taxable base drops to VND 9.5 million, and the applicable tax rate is applied only to that portion.

Dependent allowance: increased from VND 4.4 million to VND 6.2 million

Vietnam has also raised the monthly deduction for each dependant from VND 4.4 million to VND 6.2 million. This is true for kids, elderly parents, handicapped family members, and other dependents who fulfill the legal requirements.

For households with multiple dependents, the impact becomes especially visible. A taxpayer supporting two dependents now combines the standard deduction of VND 15.5 million with two dependent deductions of VND 6.2 million each. The total monthly deductions reach VND 27.9 million. In that scenario, even with a monthly income of VND 40 million, the taxable base falls to just VND 12.1 million.

This shift makes the reform feel tangible. It doesn’t just adjust percentages on paper — it meaningfully reduces the amount of income that is exposed to tax, particularly for families and middle-income earners.

Vietnam Redraws the Tax Map: Crypto, Online Income, and IP Now Count

Vietnam’s tax reform makes one thing clear: digital income is no longer treated as something exotic or optional. Beyond adjusting rates and deductions, the new personal income tax rules expand what counts as taxable income, bringing digital and intangible assets firmly into the system. The message is simple — if it generates value, it gets taxed.

The updated framework now includes:

• Cryptocurrency and digital token income, finally removing crypto from its legal gray zone and treating it like other forms of investment or speculative income.
• E-commerce and platform-based earnings, covering online sellers, freelancers, and self-employed individuals who earn through marketplaces and digital platforms.
• Income from intellectual property, such as royalties and licensing fees for software, content, patents, and trademarks.

The logic behind this move is hard to argue with. The digital economy has been running ahead of tax rules for years, and Vietnam is closing that gap. Online entrepreneurs, IT specialists, content creators, and IP holders are now fully visible within the personal income tax system. For the state, this means a broader and more realistic tax base. For individuals, it means digital income needs to be tracked and planned for just as carefully as traditional earnings.

Flat Rates, Clear Rules: Asset Transactions in Vietnam

Vietnam’s tax reform also touches property and financial asset transactions. Earlier proposals included a 20% tax on capital gains from real estate and securities. That approach was ultimately abandoned in favor of something much simpler.

The current system relies on fixed rates applied to the transaction amount:

• 2% on the sale of real estate and company shares;
• 0.1% on transfers of publicly traded securities;
• 0.1% on transactions involving gold bullion.

This model prioritizes ease of administration. Tax is calculated on the deal value, not on the difference between buying and selling prices. There’s no need to document historical costs or justify expenses, making compliance easier for all parties involved.

Where Vietnam Lowers Taxes on Purpose: Innovation and Regional Growth

Vietnam’s new personal income tax framework blends tougher coverage with selective generosity. While more income streams are now taxed, the system deliberately lightens the load for sectors that matter most to future growth. These incentives are not universal — they’re targeted, intentional, and built into the structure of PIT.

Priority treatment applies to:

• AI professionals and advanced tech specialists;
• blockchain engineers and distributed-systems developers;
• data analysts working with large-scale datasets;
• founders of innovation-focused startups;
• employees based in underdeveloped or remote regions.

For these categories, tax relief can take several forms: reduced PIT rates, partial exemptions for a defined period, or more flexible rules for recognizing income. The idea is to align incentives on both sides — lowering hiring costs for businesses while increasing take-home pay for highly skilled professionals.

Regional tax incentives serve a different but equally strategic purpose. By easing the tax burden in less developed areas, Vietnam encourages talent mobility and decentralization. Businesses gain access to new labor pools at lower cost, while the state tackles regional inequality and overconcentration in major hubs.

A Measured Reform for a Digital Economy

Vietnam’s personal income tax reform reflects a careful recalibration rather than a sharp turn. By reducing the number of tax brackets from seven to five, the system becomes easier to understand and apply, while the minimum and maximum rates remain unchanged at 5% and 35%. Higher deductions, especially for dependents, translate into real relief for households and workers in the middle of the income scale.

The reform also closes long-standing gaps by formally taxing crypto income, digital activities, and online trade, bringing modern revenue streams into the PIT framework. At the same time, asset transactions — property, exchange-traded securities, and gold bars — stay under the familiar flat-rate approach of 2% and 0.1%, avoiding complex capital gains mechanics.

Taken together, these changes point to a clear direction. Vietnam is not reinventing taxation, but upgrading it — keeping rates stable, improving clarity, and aligning the system with how income is actually earned in today’s economy.