Taxpayers welcome increase in family circumstance deductions

The National Assembly Standing Committee (NASC) has approved an adjustment to the personal income tax deduction. Accordingly, the deduction for taxpayers will be VND 15.5 million per month (equivalent to VND 186 million per year), while the deduction for each dependent will be VND 6.2 million per month. The new rates will apply from the 2026 tax year.

The decision has been positively received by the public, who believe the adjustment is timely and aligned with actual living conditions, ensuring that the policy provides fair and reasonable incentives, contributes to improving taxpayers’ living standards, and creates motivation to encourage work and productivity.

A joy comparable to a salary increase

At NASC’s 50th session held on the morning of October 17, the Government submitted to the NASC a proposal to revise personal deductions under Option 2, which is based on the growth rate of per capita income and gross domestic product (GDP). Specifically, from 2020 to the present, these indicators have increased by around 40-42%. The deduction for taxpayers will therefore increase by approximately 40.9%.

Under the current regulation, taxpayers are entitled to a monthly deduction of VND 11 million, along with an additional VND 4.4 million for each dependent. Under the newly approved adjustment, these amounts will increase to VND 15.5 million for taxpayers and VND 6.2 million per dependent per month. The adjustment is deemed necessary in light of rising prices and the growing cost of living.

The 41% increase in personal deductions is regarded as good news for many taxpayers amid rising costs of living. In the photo:  Consumers shopping at an electronics supermarket on Pham Van Thuan Street, Tran Bien ward. Photo: Kim Lieu.

With the new deduction rates, individuals can retain a larger portion of their income, especially households with small children or elderly family members to support. Tran Thi Thu Hue, a manager at a travel services company in Tran Bien ward, said: “I’m genuinely happy because the current deduction no longer matches urban living expenses. With the new rate, I’ll be able to save a few million dong each month. I’m raising two young children and my income is not high, so this reduction is a real relief.”

Similarly, Tran Van Lam, an IT employee in Trang Bom commune, shared: “I’m single, so I only receive the personal deduction. The increase from VND 11 million to VND 15.5 million significantly reduces my taxable income. I’m thrilled as it feels like getting a pay raise!”

A mechanism for annual adjustments is needed

A preliminary calculation shows that a taxpayer with two dependents currently enjoys a total deduction of VND 19.8 million per month. Under the new regulation, this figure will rise to VND 27.9 million per month, a notable increase that could save taxpayers millions of dong annually. “I’m caring for both my elderly mother and my young child. I used to feel burdened by paying taxes each month when expenses were already tight. With the new deduction, I estimate I can keep over ten million dong a year, a meaningful sum for a worker like me,” said Tran Hoang Yen from Tan Trieu ward.

The revision of deductions is seen as a necessary move to align tax policy with real living conditions while ensuring fairness. Experts say the policy not only reduces pressure on laborers but also stimulates consumption and supports economic recovery. Option 2 is expected to reduce tax obligations more substantially than adjusting solely based on the Consumer Price Index (CPI), enabling citizens to benefit more directly from socio-economic development.

On social media platforms, many people are calling for the tax policy to be implemented as soon as possible, with a mechanism for annual review. “If approved, it should be applied starting from the 2025 tax year and refunded in the first quarter of 2026. Waiting until the 2026 tax year and then refunding in 2027 would be too long,” a Facebook user named "meimei" commented.

Some opinions warn that if the increase is applied purely “mechanically” without a periodic adjustment mechanism, it may soon become outdated again. Others suggest the deduction should be more regionally flexible according to living costs or the minimum regional wage. “Every time regional minimum wages increase, deductions should rise accordingly. As soon as wage hikes are announced, the prices of basic goods in markets go up immediately,” said Le Dang Khoi from Dong Xoai ward.

Nguyen Thi Huong, an accountant at a manufacturing company in Trang Dai ward, observed that since the new deduction applies from the 2026 tax year, people will not feel its full benefits until 2027 when tax refunds are issued. “We hope the Ministry of Finance will soon issue guidance so we can apply the rates promptly when calculating salaries and tax withholdings,” she said.

Although the change cannot be implemented immediately, the decision to raise the deduction threshold has already sent a positive signal from the State to the people. It marks an essential step in reforming personal income tax policy, placing people at the center and advancing toward fairness and equity in income distribution.

By Kim Lieu – Translated by M.Nguyet, Minho