The Ministry of Finance has just drafted a resolution to the National Assembly Standing Committee on adjusting the personal income tax family deduction level, applicable for the 2026 tax period. The reason for the adjustment is that the consumer price index (CPI) in the 2020-2025 period increased by about 21.24%, exceeding 20% - the threshold for adjusting family deduction according to regulations.
Accordingly, the Ministry of Finance proposed two options to adjust the deduction level for submission to competent authorities for consideration.
Option 1, adjusted according to the CPI growth rate. Thus, the deduction for the taxpayer himself will increase from 11 million to about 13.3 million VND per month. And the deduction for dependents will increase from 4.4 million to 5.3 million VND per month.
The Ministry of Finance assesses that this plan is in accordance with the current Personal Income Tax Law, ensuring basic living needs and inflation from the most recent adjustment time.
Option 2, according to the growth rate of per capita income and per capita GDP. Accordingly, the deduction for taxpayers is expected to be 15.5 million VND, and dependents 6.2 million VND per month.
The Ministry believes that this option will contribute to reducing tax obligations for taxpayers at a higher level. If implemented according to this option, the budget will reduce revenue, but when the family deduction level is higher, tax payments will decrease, and people's disposable income will increase. Thereby, this will contribute to stimulating increased household spending, social consumption, and indirectly help increase budget revenue from other sources in the medium and long term.
Thus, in both options proposed by the Ministry of Finance, the family deduction for taxpayers will increase by 2.3-4.5 million VND, and for dependents by 0.9-1.8 million VND per person per month compared to the present.
It is expected that the new family deduction level will be implemented from the time the Resolution takes effect and applied from the 2026 tax period.
Personal income tax includes taxes from salaried employees (mainly) and business individuals. This is one of the three main taxes of the budget, along with corporate income tax and value added tax (VAT).
Currently, the family deduction is 11 million VND and each dependent is 4.4 million VND per month. This level has been maintained since July 2020. Individuals are deducted from insurance, family deductions, allowances, subsidies... the remaining amount is the income subject to personal income tax. This level will be calculated and changed by the authorities when the CPI increases by more than 20%.
The progressive tax schedule for salaried employees currently consists of 7 levels, with tax rates ranging from 5% to 35%. In fact, the family deduction and the progressive tax schedule are considered outdated and inappropriate when spending and living are increasingly expensive. It is expected that the operator will study and adjust the progressive tax schedule in the direction of reducing the number of levels and widening the income gap in the upcoming revision of the Personal Income Tax Law.
VnExpressSource: https://baohaiphongplus.vn/bo-tai-chinh-de-xuat-nang-giam-tru-gia-canh-len-cao-nhat-15-5-trieu-dong-416882.html
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