Raising the family deduction level: Millions of families have more spending money

Having been paying personal income tax (PIT) at the lowest level for many years, Ms. Thu Ngan ( Hanoi ) was excited to hear that the family deduction level would increase from the 2026 tax period. According to Ms. Ngan, in the past 2 years, the cost of living has been constantly increasing. All items from food (vegetables, meat, fish) to eggs, milk, cooking oil, etc. have increased in price.

More than 2 million people reduce personal income tax

“A bunch of vegetables at the market increased from 7,000 VND to 15,000-17,000 VND. Fresh milk and powdered milk both increased by 10%, from 50,000-70,000 VND per carton. Living expenses increased sharply while income decreased, I had to squeeze to make ends meet,” Ms. Ngan shared.

With an income of about 15 million VND/month, from the beginning of 2026, Ms. Ngan will not have to pay taxes. Each year, she will save a few million VND in taxes, having more money to increase family spending.

According to the old regulations, Mr. Le Xuan (Hanoi) still had to pay taxes after deducting his family circumstances (elderly parents, young children). With the latest increase in family circumstances deductions, Mr. Xuan will not have to pay personal income tax in the near future.

“Reducing personal income tax by a few million VND will help my family have more money to spend on shopping for our children and buying medicine for our elderly parents. The authorities increasing the family deduction level shows that they have listened to the many years of petitions from salaried workers like us,” said Mr. Xuan.

According to the new regulations, the deduction for the taxpayer himself increases from 11 million VND/month to 15.5 million VND/month (an increase of about 40.9% compared to the current level); the deduction for each dependent increases from 4.4 million VND/month to about 6.2 million VND/month.

This deduction level is based on the growth rate of per capita income and per capita GDP in 2025 compared to 2020. Accordingly, the fluctuation in per capita income and per capita GDP from 2020 to present is about 40-42%.

The new deduction level helps people with income over 17 million VND/month (taxpayer himself) and people with two dependents must have income over 27.9 million VND/month to pay tax. This meets the people's expectations for many years, and is also a reflection from many National Assembly delegations from Ho Chi Minh City, Hanoi, Vinh Long, Ha Tinh , Son La...

Personal income taxpayers are excited about the increase in family deductions. Photo: Nhu Y.

The Ministry of Finance calculates that the new deduction will help about 2.18 million people (nearly 50% of the first-level people will be exempt from paying taxes). The remaining tax-paying people will be only about 2.21 million. The state budget is expected to decrease by about 21,000 billion VND /year compared to the revenue level and number of taxpayers according to current regulations.

Tax expert Nguyen Van Duoc, General Director of Trong Tin Accounting and Tax Consulting Company Limited, said that workers' income and living expenses change faster than tax policies. Without a regular update mechanism, the deduction level will quickly become outdated, causing people to bear an unreasonable tax burden. In addition to increasing the family deduction level, the State needs to build a more flexible adjustment mechanism in the future.

Accumulated for the first 9 months of 2025, personal income tax revenue reached 177,474 billion VND , equal to 98.4% of the annual estimate. Compared to the same period in 2024, the personal income tax for 9 months exceeded 24.6%.

According to Mr. Duoc, the deduction level should be adjusted periodically according to fluctuations in the consumer price index or per capita income, instead of waiting many years to adjust it once as is currently the case.

Driving force for increased domestic consumption

Associate Professor Dr. Pham The Anh (National Economics University) said that consumption is restrained by high personal income tax compared to average income, high housing prices, and high home loan interest rates. If personal income tax is adjusted appropriately, family deductions are increased, and tax rates for low-middle incomes are reduced, purchasing power will be liberated, creating growth momentum.

“Personal income tax needs to be redesigned to prioritize workers, reduce the burden of living expenses, and regulate asset speculation that causes price bubbles and risks to the financial system. If this can be done, domestic consumption will be stimulated and businesses will have more markets,” said Mr. The Anh.

Deputy Minister of Finance Nguyen Duc Chi said that raising the family deduction level is necessary in the context of prices, living expenses and average income per capita having increased sharply compared to 2020.

The new policy helps ensure fairness, reasonableness and timely sharing of difficulties with workers after many years of increased living standards but the deduction threshold remains the same. This is not only a technical adjustment of tax, but also a social security message, demonstrating the State's sharing with the people.

On the morning of October 17, the National Assembly Standing Committee voted to approve a Resolution on adjusting the personal income tax deduction for family circumstances. Accordingly, the deduction for taxpayers is 15.5 million VND/month (186 million VND/year). The deduction for each dependent is 6.2 million VND/month. This Resolution will apply from the 2026 tax period.

According to Dr. Nguyen Duc Kien, from a macroeconomic perspective, this is a further step in the process of forming and developing the domestic market. When people have good income, domestic consumption will increase. Thus, Vietnamese enterprises will have a large enough market to ensure the break-even point of the enterprise, before expanding to the region and the world.

Ms. Nguyen Thi Cuc, President of the Vietnam Tax Consulting Association, said that increasing family deductions will reduce budget revenue from this tax. However, reasonable tax collection conditions will encourage taxpayer compliance. Reasonable tax collection levels will reduce tax evasion and avoidance, and people will actively pay taxes.

In the short term, personal income tax is reduced. In the long term, it stimulates consumption and shopping, but total revenue does not change much.

Source: https://baoquangninh.vn/nang-muc-giam-tru-gia-canh-hang-trieu-gia-dinh-co-them-khoan-chi-tieu-3382242.html