Amending the Personal Income Tax Law: Reducing tax rates, expanding incentives and increasing family deductions

Photo caption

Minister of Finance Nguyen Van Thang, authorized by the Prime Minister, presented the Proposal on 05 projects: Investment Law (amended); Law amending and supplementing a number of articles of the Law on Public Debt Management; Law amending and supplementing a number of articles of the Law on Insurance Business; Law amending and supplementing a number of articles of the Law on Statistics; Law amending and supplementing a number of articles of the Law on Prices, on November 3, 2025. Photo: Doan Tan/VNA

This is one of the important law projects that has attracted public attention, with a comprehensive scope of amendments and supplements to all 35 articles of the current Law, aiming at a fair and reasonable tax system, encouraging creative labor and suitable to the current socio -economic development context.
The draft revised Law focuses on many major contents: restructuring the progressive tax schedule; adding deductions related to education and health care costs; regulating tax incentives for high-tech human resources; adjusting principles and levels of family deductions for taxpayers.
Accordingly, the tax schedule is simplified, reducing the number of levels from 7 to 5, with tax rates of 5%, 15%, 25%, 30% and 35% respectively. The gap between the levels is widened, making it easier for taxpayers to calculate and reduce tax obligations compared to the current one. This is a regulation to simplify the tax schedule, making it easier for taxpayers to calculate and monitor their tax obligations and reduce tax obligations for all individuals at the current levels compared to the current Tax Schedule. Taxpayers are expected to have more rights and incentives than under the current Personal Income Tax Law.
The Government will continue to research and evaluate carefully to ensure the highest reasonableness and fairness before submitting to the National Assembly for approval with the goal of reducing difficulties for taxpayers, increasing creativity, efficiency and labor, thereby contributing to supporting economic growth.
Notably, the draft Law supplements the provisions allowing taxpayers to deduct certain expenses related to education, training and health care before calculating tax. In this amendment, the draft Law on Personal Income Tax not only inherits the current family deductions (individuals are entitled to deduct social insurance, health insurance, unemployment insurance, professional liability insurance for certain occupations that must participate in compulsory insurance, charitable and humanitarian contributions as prescribed), does not include allowances and subsidies in taxable income; but also expands the scope for taxpayers by adding additional deductions before calculating tax for expenses for health care and education to implement important Resolutions of the Politburo, specifically: taxpayers will be able to deduct certain expenses related to education - training and health care before calculating tax.
This policy encourages individuals to invest in education and improve their qualifications, helping people have more resources to solve financial problems when facing illness. By allowing people to deduct essential expenses such as health and education, the State shows its commitment to sharing the financial burden with workers, creating conditions for them to have more disposable income, thereby stabilizing their lives and contributing more positively to socio-economic development.
Another new point is the special incentives for high-tech human resources, individuals working in the fields of technology, innovation, digital transformation... with a 50% reduction in personal income tax. This is considered a strategic step to attract and retain talent, while creating a competitive advantage in tax policy in the region.
In addition, the family deduction level has also been adjusted to increase sharply: from 11 million to 15.5 million VND/month for the taxpayer himself; and from 4.4 million to 6.2 million VND/month for each dependent. According to calculations, with this new family deduction level, an individual (if no dependent) with an income of 17 million VND/month will not have to pay tax. In case an individual has 01 dependent with an income of 24 million VND/month, this person will not have to pay tax. In case an individual has 02 dependents with an income of 31 million VND/month, this person will not have to pay tax.
In particular, the draft Law amending the principle of adjusting the family deduction level assigns the Government to proactively base on price and income fluctuations to adjust, instead of waiting for the CPI to increase by more than 20% as it is now. In reality, waiting for the CPI to increase by more than 20% before adjusting the family deduction level takes about 5 years, while factors such as costs, prices, and people's incomes fluctuate a lot, so it is possible to base on these factors to adjust the family deduction level without waiting for the CPI to fluctuate by more than 20%.

With these extensive amendments, the Draft Law on Personal Income Tax (amended) is expected to contribute to perfecting tax policy in a more modern, fair and taxpayer-friendly direction, encouraging innovation, improving labor productivity and promoting sustainable economic growth.

Source: https://baotintuc.vn/kinh-te/sua-luat-thue-thu-nhap-ca-nhan-giam-bac-thue-mo-rong-uu-dai-va-tang-muc-giam-tru-gia-canh-20251103201731984.htm