Proposing 2 options to adjust family deduction level

The draft recognizes that the current family deduction level has been applied from 2020 to present, so it is necessary to adjust it accordingly. The Ministry of Finance proposes two options to adjust the family deduction level.

Activities at Hanoi Tax Department. Photo - illustration.

Specifically, option 1 adjusts the family deduction level according to the growth rate of the consumer price index (CPI). Specifically, the deduction level for the taxpayer himself/herself increases from 11 million VND/month to about 13.3 million VND/month; the deduction level for each dependent increases from 4.4 million VND/month to 5.3 million VND/month (an increase of about 21.24% compared to the current level).

Option 2: Adjust the family deduction level according to the growth rate of average income per capita and the growth rate of average GDP per capita. Accordingly, the deduction level for the taxpayer himself/herself increases from 11 million VND/month to about 15.5 million VND/month (an increase of about 21.24% compared to the current level); the deduction level for each dependent increases from 4.4 million VND/month to about 6.2 million VND/month.

The Ministry of Finance said that the majority of opinions agreed with option 2. With this option, according to the Ministry of Finance, people with salary and wage income of 15 million VND per month do not have to pay personal income tax after deducting social insurance, health insurance , and unemployment insurance. If the income is 20 million VND, the tax payable is about 120,000 VND per month after deducting insurance costs.

In case of having 1 dependent, an individual with income of 25 million VND will pay tax of 33,750 VND; and with income of 30 million VND, the tax rate is 265,000 VND. In case of having allowances, subsidies, and voluntary pension insurance participation deducted before calculating tax, the tax payable will be lower, or none.

In case an individual has 2 dependents with an income of 30 million VND/month, if social insurance, health insurance, unemployment insurance... are deducted, personal income tax is not required; if the income is 40 million VND/month, the tax is only 540 thousand VND/month (personal income tax rate on total income is about 1.35%).

According to the Ministry of Finance, when applying the expected deduction of 15.5 million VND/month, most taxpayers at level 1 will switch to not having to pay tax (accounting for 95% of current taxpayers at level 1), a part of individuals at level 2 will switch to level 1 or not have to pay tax. Similarly, those at the remaining tax levels will have their personal income tax payable reduced.

The Ministry of Finance calculates that the budget revenue from personal income tax is expected to be about VND84,477 billion, a decrease of VND21,000 billion per year compared to the current level. The number of people still having to pay taxes is 2.21 million, a decrease of 2.18 million (49.66%) due to the change from level 1 to non-taxable status.

According to the Ministry of Finance, adjusting the family deduction level for taxpayers according to the above options will help reduce difficulties for taxpayers in the context of increasing prices and inflation compared to 2020. The amount of tax payable will be reduced for all taxpayers, in which the reduction rate of tax payable for taxpayers at low tax rates will be higher than that of taxpayers at high tax rates.

In order to make up for the shortfall in revenue due to policy implementation, the Government focuses on directing ministries, central agencies and localities to focus on implementing tasks, solutions and fiscal policies according to the Resolutions of the National Assembly and the Government issued to remove difficulties for businesses and people, promote GDP growth drivers in 2025 to reach at least 8% and strive for double digits in more favorable conditions, thereby creating more revenue for the state budget.

At the same time, be determined in collecting state budget revenue, strengthen management, reform administrative procedures, and promote digital transformation in tax management, especially in key areas and fields, land revenue, real estate transfer, e-commerce activities, and business activities on digital platforms.

The draft adjustment to the family deduction level will take effect when the Resolution of the National Assembly Standing Committee is signed and applied for the 2026 tax period.

However, there are still some suggestions to increase the family deduction level higher than proposed in the draft. The National Assembly delegation of Dien Bien province said that, in order to have a suitable family deduction level, ensuring stability, consistent with the CPI growth rate in 2025 and the period 2026 - 2030, it is recommended that the Ministry of Finance consider adjusting the family deduction level for taxpayers to 20 million VND/month (equivalent to 240 million VND/year) and adjusting the family deduction for each dependent to 10 million VND/month (in the draft, the proposed family deduction for each dependent is 6.2 million VND/month). This adjustment not only ensures the principle of fairness and fosters a sustainable source of income, but also contributes to supporting people to overcome the pressure of increasing living costs, contributing to expanding the scope of voluntary tax declaration and payment in a transparent and stable manner.

The Ho Chi Minh City National Assembly delegation believes that, according to the analysis data and the recent price fluctuations, the predicted increase in the price index of basic goods by the end of 2025 could reach 50%. Therefore, it is recommended to adjust the family deduction for taxpayers to increase by 50%, to 16.5 million VND/month. At the same time, with the increase in family deduction, when building the Personal Income Tax Law (amended), it is also necessary to change the tax rates in the progressive tax table so that the income of the tax rate with the highest tax rate also increases by 50%, reaching 120 million VND/month.

The Hue City National Assembly Delegation believes that the two options for adjusting family deductions are built on different bases. Option 1 is based on CPI and option 2 is based on the growth rate of income/GDP per capita.

In the context of Vietnam's rapid growth and improving living standards, but the budget still has to undertake many social security tasks, choosing a single option is not appropriate.

Therefore, the Hue City National Assembly Delegation proposed to develop a combined plan (Option 3). Specifically, annual adjustment according to CPI to ensure that family deductions are not subject to inflation; periodically every 3-5 years, additional adjustments according to the growth rate of income/GDP per capita, in order to reasonably share the growth results with taxpayers.

According to VNA

Source: https://baobacninhtv.vn/de-xuat-2-phuong-an-dieu-chinh-muc-giam-tru-gia-canh-postid426057.bbg