Current Family Deduction Levels Remain in Effect

The tax authority has issued Official Dispatch 1296/CT-NVT guiding personal income tax (PIT) finalization for income from salaries and wages, outlining key issues related to family circumstance deductions, the applicable tax schedule, and the responsibilities of taxpayers and income-paying organizations during the 2025 finalization period.

The tax sector has many programs to modernize tax administration and enhance transparency and convenience for taxpayersLe Hien

According to the tax authority, during the 2025 tax finalization period, policies on family circumstance deductions and the progressive tax schedule will continue to apply under current regulations. Changes to deduction levels and the tax bracket structure will take effect starting from the 2026 tax period.

Existing family deduction levels continue to apply

Under Official Dispatch 1296/CT-NVT, the family circumstance deduction applicable to the 2025 tax finalization period is determined in line with Resolution 954/2020/UBTVQH14 of the National Assembly Standing Committee.

Specifically, the deduction for taxpayers is VND11 million per month, equivalent to VND132 million per year. For each dependent, the deduction is VND4.4 million per month.

Accordingly, when completing PIT finalization for 2025, individuals earning income from salaries and wages will continue to apply these deduction levels to determine taxable income.

The tax authority said these deduction levels apply to the entire 2025 tax period. Any adjustment to family circumstance deductions will take effect starting from the 2026 tax period under newly issued regulations.

Accordingly, from January 1, 2026, family circumstance deductions will be implemented under Resolution 110/2025/UBTVQH15 of the National Assembly Standing Committee, replacing the current provisions under Resolution 954/2020/UBTVQH14.

Under the new rules, the deduction for taxpayers will increase to VND15.5 million per month, equivalent to VND186 million per year. At the same time, the deduction for each dependent will also be adjusted to VND6.2 million per month.

The adjustment to family circumstance deductions is expected to raise the taxable income threshold, thereby easing the tax burden on taxpayers as living costs and average household incomes have changed.

At the same time, the new policy is expected to provide greater financial flexibility while aligning more closely with current living conditions and income levels across society.

Taxpayers should proactively review finalization obligations

Alongside the provisions on family circumstance deductions, the tax authority also drew attention to the application of the progressive tax schedule during the 2025 tax finalization period.

Under Personal Income Tax Law 04/2007/QH12, income from salaries and wages earned by resident individuals during the 2025 tax period will continue to be subject to a progressive tax schedule with seven tax brackets.

However, beginning with the 2026 tax period, under Personal Income Tax Law 109/2025/QH15, the progressive tax schedule will be adjusted to five tax brackets. This change aims to simplify tax calculation and make it easier for taxpayers during tax declaration and compliance.

Regarding tax finalization, the tax authority recommends that taxpayers proactively review income earned during the year to clearly determine their obligations. This includes cases requiring direct finalization with the tax authority, cases eligible to authorize finalization, and cases not subject to finalization under the regulations.

For organizations and individuals paying income from salaries and wages, the tax authority requires PIT finalization declarations regardless of whether tax withholding occurred. At the same time, these entities are responsible for completing tax finalization on behalf of individuals when employees provide authorization in accordance with the rules.

If an organization or individual paying income undergoes dissolution, bankruptcy, termination of operations, contract termination, or corporate restructuring, PIT finalization declarations must be submitted up to the time these events occur.

For individuals earning income from salaries and wages, the tax authority identified several cases requiring direct finalization with the tax authority. Specifically, resident individuals with income from two or more sources who do not meet the conditions for authorized finalization must directly submit tax finalization declarations to the tax authority if additional tax is payable or if excess tax has been paid and a refund or offset against the next tax period is requested.

In addition, resident individuals receiving salary or wage income from overseas or from international organizations, embassies, or consulates where tax has not been withheld during the year must also carry out tax finalization directly with the tax authority if additional tax arises or if excess tax has been paid and a refund or offset is requested.

For foreign individuals ending their employment contracts in Vietnam, the tax authority requires tax finalization with the tax authority before departure. If the individual has not completed the finalization procedures before leaving Vietnam, they may authorize the income-paying organization or another organization or individual to complete the finalization in accordance with regulations.

To support taxpayers during the finalization process, the tax authority recommends that individuals install and use the eTax Mobile application. Through the application, taxpayers can review income information that income-paying organizations have declared during the year and monitor their tax obligations.

Based on updated data, the system also helps determine whether an individual must directly complete PIT finalization, thereby reducing errors and making it easier for taxpayers to fulfill obligations to the government budget.

By Le Hien, Vietnam Business Forum