VINACHEM

The proposed increase of the family deduction threshold to VND15.5 million/month for taxpayers is considered outdated, especially since it will only take effect from the 2026 tax year, meaning tax finalization won't occur until 2027.

The draft resolution of the National Assembly Standing Committee on adjusting Personal Income Tax family deductions is currently under review by the Ministry of Justice.

Of the two options, the Ministry of Finance (MOF) has chosen Option 2, which raises the monthly deduction for taxpayers from VND11 million to VND15.5 million, and for dependents from VND4.4 million to VND6.2 million.

According to MOF, with this adjustment, most taxpayers in the first tax bracket will no longer have to pay tax. Some individuals in the second bracket will either be exempt or move down to the first bracket. Similarly, individuals in higher brackets will also see reductions in their PIT obligations.

However, Nguyen Ngoc Tinh, vice chair of the HCMC Association of Tax Consultants and Agencies, commented that the proposed deduction level is still too low and fails to meet the basic needs of taxpayers.

He argued that the family deduction should be at least equal to the average GDP per capita income to meet essential living needs. Otherwise, the policy won’t ensure that taxpayers can still accumulate savings after paying taxes.

“The need to save money for emergencies or life’s uncertainties is a reasonable expectation for taxpayers. If people end up burdened or unable to meet daily necessities like food, transportation, education, or healthcare after paying taxes, then the policy is not reasonable,” Tinh explained.

He believes the proposed VND15.5 million/month deduction is outdated, especially when it won’t be implemented until the 2026 tax period, meaning finalization will only happen in 2027.

“Meanwhile, living costs and inflation may fluctuate sharply, rendering this deduction level obsolete very quickly. So, policy design should have foresight, encouraging people to work hard while ensuring they can still save after tax,” he said.

The expert proposed increasing the deduction for taxpayers to VND18 million/month.

As for dependents, after the PIT law is amended to allow deductions for education and healthcare expenses, the dependent deduction should also increase. Initially, he suggested raising it to 50 percent of the taxpayer’s deduction, equivalent to VND9 million/month/person, and later moving toward full parity with the taxpayer’s deduction.

Pham Manh Hung, deputy director of the Banking Science Research Institute at the Banking Academy, assessed that, at this time, the proposed deduction increase to VND15.5 million for taxpayers and VND6.2 million for dependents will significantly loosen the tax threshold, especially for young urban families.

Individuals with an income of VND15-20 million per month will pay almost no tax, or pay very low tax after deducting insurance and other deductions.

However, Vietnam often adjusts these levels based on a "threshold" model, only considering changes when the cumulative CPI exceeds 20 percent. This risks lagging behind real economic conditions, especially if housing, education, healthcare costs, or inflation rise quickly in the next few years. The protective effect of the proposed deduction could diminish before the next adjustment.

Therefore, from a technical standpoint, there should be a periodic review every 2-3 years, rather than waiting for the CPI to exceed a large threshold before considering adjustments.

The vice president of the HCMC Association of Tax Consultants and Agencies recommended that the resolution take effect right from 2025 rather than waiting until 2026.

“The draft currently applies to the 2026 tax year, meaning that taxpayers would have to wait until March 2027 to finalize taxes, which is too long. Meanwhile, the tax finalization for 2025 isn’t due until March-April 2026, so it’s entirely feasible to apply the new deduction starting in 2025 to meet public expectations,” he noted.

According to Tinh, income tax from salaried workers accounts for a large share of PIT revenue and has steadily increased in recent years. Therefore, the government should implement the new deduction early to motivate and support workers in businesses and organizations.

Nguyen Ngoc Tu, a lecturer at Hanoi University of Business and Technology, also proposed applying the new deduction for the 2025 tax year instead of 2026. Delaying it would only make the policy more outdated and increase the burden on taxpayers.

He noted that if the National Assembly passes the resolution in its October session, the PIT for 2025 would be finalized in March-April 2026. From a technical standpoint, applying the new policy immediately is feasible and would not cause complications.