Types of income subject to personal income tax and detailed calculation

The method of calculating personal income tax has been clearly stipulated in the Law on Personal Income Tax. The method of calculating personal income tax for business individuals and employees is different.

How to calculate personal income tax for business individuals

Business individuals pay personal income tax according to the revenue rate for each field and industry of production and business. In case business individuals cannot determine the revenue, the competent tax authority shall determine the revenue according to the provisions of the law on tax administration.

Tax rates are determined as follows:

Industry category	Tax rate (%)
Distribution and supply of goods	0.5
Service and construction sectors do not include materials	2
Property leasing, insurance agency, lottery agency, multi-level marketing agency	5
Production, transportation, services associated with goods, construction with contracted materials	1.5
Other business activities	1

Personal income tax payable for business individuals = taxable revenue x personal income tax rate.

Business people with revenue from production and business activities in the calendar year of less than 100 million VND do not have to pay personal income tax.

For example: Mr. Nguyen Van A sells electronics, with a personal income tax revenue of 40 million VND in June 2025. His business sector belongs to the distribution and supply of goods group, so the personal income tax rate is calculated at 0.5%.

The amount of personal income tax that Mr. A must pay is calculated as follows:

Tax payable = Revenue x Tax rate = 40 million VND x 0.5% = 200,000 (VND).

How to calculate personal income tax for salaried individuals

Personal income tax for salaried individuals is calculated based on taxable income and progressive tax rates.

According to current regulations, there are 2 types of income from salaries and wages that are subject to tax, including: irregular income (labor contracts of less than 2 months and seasonal contracts, commissions, discounts, etc.); regular income (salary, bonuses, allowances, etc. for labor contracts of 2 months or more).

For casual income, if the revenue is over 2 million VND or the total payments in a month are over 2 million VND, the tax is deducted at a rate of 10%. For income under 2 million VND, there is no deduction.

With regular income, individuals without dependents must pay income tax when their total income from salary and wages is over 11 million VND/month (this income has deducted mandatory insurance contributions according to regulations, subsidies and other contributions such as charity, humanitarian...).

The family deduction for personal income tax payers is 11 million VND. In addition, if there are dependents, the deduction for each dependent is 4.4 million VND/month.

The progressive tax schedule for wage earners consists of seven levels, with tax rates ranging from 5% to 35%.

The progressive tax rates are determined as follows:

Tax level	Taxable income/year (million VND)	Taxable income/month (million VND)	Tax rate (%)
1	Up to 60	Up to 5	5
2	Over 60 to 120	Over 5 to 10	10
3	Over 120 to 216	Over 10 to 18	15
4	Over 216 to 384	Over 18 to 32	20
5	Above 384 to 624	Over 32 to 52	25
6	Above 624 to 960	Over 52 to 80	30
7	Over 960	Over 80	35

Thus, the personal income tax payable for salaried employees is the total tax calculated by each level.

Tax amount calculated for each income level = Taxable income of income level x Corresponding tax rate of that income level

For example: Ms. Nguyen Thi A has an income from salary and wages in June 2025 of 30 million VND with a monthly insurance contribution of 3.15 million VND (in the compulsory social insurance contribution structure, employees will pay 10.5% of their salary as the basis for social insurance contribution). Ms. A is single, does not register for family deductions for dependents and does not have any allowances or subsidies that are exempt.

Ms. A's personal income taxable income is determined as follows:

- Income subject to personal income tax is 30 million VND

- Personal family deduction according to current regulations is 11 million VND

- Monthly insurance payment is 3.15 million VND

Taxable income = Personal income taxable income - Family deductions - Monthly insurance payments = 30 million VND - 11 million VND - 3.15 million VND = 15.85 million VND.

The amount of personal income tax that Ms. A must pay = 5 million VND x 5% + 5 million VND x 10% + 5.85 million VND x 15% = 1.6275 (million VND).

10 types of taxable income

According to Article 3 of the Law on Personal Income Tax, income subject to personal income tax includes:

- Business income

- Income from wages and salaries

- Income from capital investment

- Income from capital transfer

- Income from real estate transfer

- Income from winnings

- Copyright income

- Income from franchising

- Income from inheritance is securities, capital in economic organizations, business establishments, real estate and other assets that must be registered for ownership or registered for use.

- Income from receiving gifts of securities, capital in economic organizations, business establishments, real estate and other assets that must be registered for ownership or use.

The Personal Income Tax Law has been in effect since 2008. However, to date, many regulations are considered inadequate, including family deductions.

Currently, the deduction for individual taxpayers is 11 million VND and the deduction for each dependent is 4.4 million VND, maintained from July 2020. Along with that, the progressive tax schedule for salaried employees is also considered to be no longer suitable to reality...

At the regular press conference of the Ministry of Finance on July 2, Mr. Truong Ba Tuan, Deputy Director of the Department of Management and Supervision of Tax, Fee and Charge Policies, said that the Ministry is coordinating with ministries, branches and localities to propose the development of a draft Law on Personal Income Tax (replacement) to submit to the National Assembly for consideration and approval at the session in October this year.

Source: https://dantri.com.vn/kinh-doanh/nhung-loai-thu-nhap-phai-nop-thue-thu-nhap-ca-nhan-va-cach-tinh-chi-tiet-20250709013549511.htm