NEW POINTS IN THE AMENDED PERSONAL INCOME TAX LAW EFFECTIVE FROM JULY 1, 2026

On December 10, 2025, the National Assembly officially voted to approve the amended Personal Income Tax Law. This important law will take effect from July 1, 2026, bringing groundbreaking changes to the tax schedule, personal deductions, and regulations for business households.

Below is a detailed summary of the most prominent new points that your business needs to update immediately:

1. Reducing the progressive tax rate to only 5 tiers

Previously, the progressive tax scheme consisted of 7 tiers with the following calculation rates:

Tier	Taxable Income/Month (TI)	Tax Rate	Method 1: Cumulative Tax Calculation	Method 2: Simplified Method (Recommended)
1	Up to 5 million VND	5%	0 + 5% TI	5% TI
2	Over 5 to 10 million VND	10%	0.25 + 10% (TI – 5)	10% TI – 0.25
3	Over 10 to 18 million VND	15%	0.75 + 15% (TI – 10)	15% TI – 0.75
4	Over 18 to 32 million VND	20%	1.95 + 20% (TI – 18)	20% TI – 1.65
5	Over 32 to 52 million VND	25%	4.75 + 25% (TI – 32)	25% TI – 3.25
6	Over 52 to 80 million VND	30%	9.75 + 30% (TI – 52)	30% TI – 5.85
7	Over 80 million VND	35%	18.15 + 35% (TI – 80)	35% TI – 9.85

 According to the newly updated Personal Income Tax Law, the National Assembly has approved a plan to "simplify" the tax brackets from 7 to 5. This change not only simplifies salary calculation but also widens the income gap between tax brackets (spreading the brackets apart), helping to reduce the actual tax rate margin for workers.

Tier	Taxable Income/Year (Million VND)	Taxable Income/Month (Million VND)	Tax Rate (%)	Change compared to the old law
1	Up to 120	Up to 10	5%	Remains unchanged
2	Above 120 – 360	Above 10 – 30	10%	Widen tier spacing
3	Above 360 – 720	Above 30 – 60	20%	Widen tier spacing
4	Above 720 – 1.200	Above 60 – 100	30%	Widen tier spacing
5	Above 1.200	Above 100	35%	Highest tax threshold

 => Raising the highest tax threshold (35%) to taxable income above 100 million VND/month (instead of 80 million as before) is a positive adjustment, encouraging high-level personnel and reducing tax pressure on income from salaries and wages.

2. Adjustment of Personal Income Tax Deductions

Based on Resolution 110/2025/UBTVQH15, the personal income tax deductions are re-established to protect the actual income of taxpayers:

• Personal deduction: VND 15,500,000/month.

• Dependent deduction: VND 6,200,000/month/person.

3. Calculation of Personal Income Tax and Personal Income Tax Deductions

In cases where a taxpayer works and earns income from two sources, the calculation of personal income tax and personal income tax deductions is as follows:

Case 1: If the taxpayer signs an employment contract of 3 months or more with two sources, they can choose and register for personal income tax deductions at one source that pays income from salaries and wages, as stipulated in point c, clause 1, Article 9 of Circular 111/2013/TT-BTC.

Simultaneously, register for personal deductions for dependents as stipulated in point h, clause 1, Article 9 of Circular 111/2013/TT-BTC (abbreviated as number 1), specifically:

- Initial registration of dependents:

+ Taxpayers with income from salaries and wages register dependents using the form issued with the tax management guidance document and submit two copies to the organization or individual paying the income as a basis for calculating deductions for dependents.

+ The organization or individual paying the income retains one copy of the registration and submits one copy to the tax authority directly managing them at the same time as submitting the personal income tax return for that tax period as prescribed by the tax management law.

- Registration for changes in dependents: When there are changes (increase or decrease) in the number of dependents, the taxpayer must submit a supplementary declaration of the changes in dependent information using the form issued with the tax management guidance document and submit it to the organization or individual paying the income, or to the tax authority for taxpayers who file their tax returns directly with the tax authority.

For example, a taxpayer has two sources of income as follows:

- Company A: income of 16 million VND/month (after deducting all applicable deductions) and the taxpayer has registered for personal family allowance deductions here.

- Company B: income of 5 million VND/month and has not registered for deductions here.

- The taxpayer has registered one additional dependent for family allowance deduction at Company A.

Accordingly, the calculation of personal income tax and tax obligations is as follows:

According to the principle of family allowance deduction, each individual is only allowed to claim a deduction for themselves at one place at a time, therefore:

- At Company A, an income of 16 million VND will be subject to family allowance deduction (15.5 million VND/month) and one additional dependent is registered for family allowance deduction at Company A (6.2 million VND/month).

- At Company B, no additional deduction is allowed, so the remaining 5 million VND will be subject to personal income tax. (Because company B does not have the right to deduct tax for taxpayers).

Therefore, when the taxpayer receives their monthly salary, they will not have to pay personal income tax at company A. However, the taxpayer will have to pay personal income tax at company B according to the progressive tax rate schedule.

When settling personal income tax at the end of the year, the taxpayer will consolidate all income from both companies. At that time, the family allowance deduction (15.5 million VND/month and dependents, if any) will be calculated once on the total income. If the total income after deductions is still below the personal income tax threshold, the taxpayer will be refunded the tax deducted by company B.

Case 2: If the taxpayer only signs an employment contract with one company for 3 months or more and another company does not sign an employment contract or signs an employment contract for less than 3 months, they should register for personal deductions at the company where they signed the employment contract for 3 months or more (note that income must be greater than VND 15.5 million/month) as stipulated in point c, clause 1, Article 9 of Circular 111/2013/TT-BTC and Article 1 of Resolution 110/2025/UBTVQH15.

At the same time, register and declare personal deductions for dependents as stipulated in point h, clause 1, Article 9 of Circular 111/2013/TT-BTC, similar to section (abbreviated as number 1).

In that case, income (from wages, fees, and other payments) for companies that do not have labor contracts or have labor contracts of less than 3 months, if 2 million VND or more, is subject to a 10% withholding tax as stipulated in point i, clause 1, Article 9 of Circular 111/2013/TT-BTC before paying the income to the employee.

=> The income-paying organization is responsible for declaring personal income tax monthly/quarterly and performing tax settlement on behalf of the employee (as per point a, clause 1, point c, clause 2, and point d, clause 6, Article 8 of Decree 126/2020/ND-CP) if the employee authorizes it. If the employee does not authorize it, the employee is responsible for self-declaring, paying, and settling personal income tax.

What should the business owner and accountant do?

To prepare for the effective date of the Law (July 1, 2026),but the tier tax rate and personal deductions applicable from the 2026 tax year (from January 1, 2026), businesses and chief accountants need to review their internal tax management processes based on the 11 core contents of the 2019 Tax Administration Law (Article 4), including:

1. Procedures for registration, declaration, payment, and tax assessment.

2. Procedures for tax refunds, exemptions, and reductions.

3. Handling tax debts (debt write-off, debt cancellation, payment extension).

4. Updating taxpayer information (individual/dependent tax identification number).

5. Managing invoices and documents (especially for input from household businesses).

6. Preparing documents for tax audits and inspections.

7. Tax enforcement measures.

8. Risks of administrative penalties for violations.

9. Complaint and grievance procedures.

10. International cooperation (for global personal income tax).

11. Employee outreach and support within the enterprise.

Recommendation: The Human Resources and Accounting departments should collaborate to revise the payroll spreadsheet and forecast the payroll budget for fiscal year 2026 starting now.

If your company still has questions about the new regulations related to personal income tax, please contact us immediately via email: consultant@txindeco.com or hotline 84-961 977 764 for detailed advice.