In December 2025, Vietnam’s National Assembly passed the amended Personal Income Tax (PIT) Law (Law No. 109/2025/QH15).
This amendment was implemented in two phases.
- From January 1, 2026: Increased personal and dependent deductions (early application under Resolution No. 110/2025/UBTVQH15)
- From July 1, 2026: Full implementation including new 5-bracket progressive tax rates and expanded tax-exempt income categories
[About this article: both phases are now in effect]
This article was originally published before the amendment took effect (February 2026) as a preparation guide. Both phases — the increased deductions (January 1, 2026) and the 5-bracket progressive rates (July 1, 2026) — are now in force.
The task is no longer to prepare, but to verify that nothing was missed and make retroactive corrections where needed. Use the sections below as a verification checklist.
This article focuses not on the overview of the amendment, but on the practical steps companies need to confirm.
▶ For the full overview: Vietnam National Assembly Passes PIT Law Amendment — Effective July 1, 2026
Key Changes at a Glance
Increased Deductions (Effective January 2026 — Already in Effect)
| Item | Former (Until Dec 2025) | Current (From Jan 2026) |
|---|---|---|
| Personal deduction (monthly) | 11,000,000 VND | 15,500,000 VND |
| Dependent deduction (monthly, per person) | 4,400,000 VND | 6,200,000 VND |
Deductions have been raised by approximately 40%, and apply from the 2026 tax period (January payroll onward).
Note: The 2025 tax finalization (conducted in early 2026) still uses the old deduction amounts.
New Progressive Tax Brackets (Effective July 2026 — Now in Force)
| Taxable Income (Monthly) | Former Rate (7 Brackets, until June 30, 2026) | Current Rate (5 Brackets, from July 1, 2026) |
|---|---|---|
| Up to 5,000,000 VND | 5% | 5% (Up to 10,000,000 VND) |
| 5,000,001–10,000,000 VND | 10% | |
| 10,000,001–18,000,000 VND | 15% | 10% (10,000,001–30,000,000 VND) |
| 18,000,001–32,000,000 VND | 20% | |
| 32,000,001–52,000,000 VND | 25% | 20% (30,000,001–60,000,000 VND) |
| 52,000,001–80,000,000 VND | 30% | |
| Over 80,000,000 VND | 35% | 30% (60,000,001–100,000,000 VND) 35% (Over 100,000,000 VND) |
The simplified bracket structure resulted in effective tax reductions, particularly for middle-income earners.
5 Things Companies Should Verify
① Confirm the Tax Table in Your Payroll System Has Been Updated
Deduction updates should have been in place since January, and the switch to the 5-bracket tax table since July.
- The progressive tax table has been changed from 7 brackets to 5
- Taxable income ranges have been updated for each bracket (no abolished 15% or 25% tiers remaining)
- Verify against actual figures that the new rates applied correctly from July payroll onward
- Confirm the mixed-rate year-end finalization (Jan–Jun under old rates, Jul–Dec under new rates)
If you manage payroll in Excel, re-check for missed formula updates across multiple spreadsheets.
② Verify That New Deductions Are Applied (Since January)
The increased personal and dependent deductions have been in effect since January 2026.
Confirm the following.
- Payroll from January onward correctly uses the new deductions (Personal: 15,500,000 VND, Dependent: 6,200,000 VND)
- The 2025 tax finalization uses the old deduction amounts (new deductions apply from the 2026 tax period only)
- Payslips correctly reflect the changes for employees
If any month was missed, retroactive corrections back to January are required. Act promptly.
③ Review and Update Dependent Deduction Registrations
The change in deduction amounts is a good opportunity to review current registrations.
- Check for any unregistered dependents
- Verify the validity of supporting documents (birth certificates, marriage certificates, etc.)
- Ask employees if they have new eligible dependents
- Prepare registration documents for the tax authority
Dependent deductions are not applied without proper registration. Missing registrations directly reduce employees’ take-home pay.
④ Review Gross-Up Contracts for Expatriate Employees
Many Japanese companies use gross-up arrangements (company bears the tax) for expatriate employees in Vietnam.
With deductions changing from January and tax rates from July, the company’s PIT burden shifted in two stages during the year. In particular, raising the 35% threshold from 80,000,000 VND to 100,000,000 VND per month reduces the company’s burden for higher-paid expatriates.
- Verify actuals for both scenarios: Jan–Jun (new deductions + old tax rates) and Jul onward (new deductions + new tax rates)
- Compare company-borne PIT against budget and re-forecast the year-end position
- If headquarters reporting or a budget revision is needed, act promptly
Gross-up calculations are complex. We strongly recommend verifying against actual figures before year-end finalization.
⑤ Prepare Employee Communication Materials
Since take-home pay changed in two phases — deductions from January and tax rates from July — prepare the following to handle inquiries smoothly.
- Take-home pay simulations by salary range (pre-amendment vs. Jan onward vs. Jul onward)
- A simple explanation document for employees (in Vietnamese)
- An FAQ list for common questions
Vietnamese employees tend to be sensitive to changes in take-home pay. Clear communication prevents unnecessary confusion.
Common Oversights by Japanese Companies
- Missing the early deduction application: Deductions changed from January. If old amounts were used, retroactive corrections back to January are required
- Missed tax table update: Still calculating on the former 7 brackets after July, with the 15% and 25% tiers left in place
- Delayed reporting to headquarters: Failing to report the personnel cost impact of tax rate changes in time for a budget revision
- Incomplete Excel updates: Forgetting to update tax rate tables in some of the many spreadsheets used for payroll
- Forgetting to recalculate gross-up: Overlooking that the company’s PIT burden changes even when net salary stays the same
Conclusion
This PIT amendment was implemented in two phases — increased deductions from January 2026, and simplified tax brackets from July 2026 — and both are now in force.
While positive for most companies and employees, the different effective dates require careful attention.
From payroll tax tables and gross-up recalculations to dependent deduction filings, verify that nothing was missed before year-end tax finalization.
▶ Related articles:
Vietnam National Assembly Passes PIT Law Amendment — Effective July 1, 2026
Vietnam Personal Income Tax (PIT): Structure and Calculation Steps
Vietnam Payroll Basics: The Complete Guide
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Author of this article
関連記事
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Vietnam Personal Income Tax for Japanese Expatriates — Residency, Gross-up, and Japan-Vietnam Tax Treaty -
Vietnam PIT Law Amendment (Effective July 2026) — Final Pre-Enforcement Checklist
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Vietnam Payroll FAQ: Common Questions on Social Insurance, PIT, and Foreign Employees
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Understanding Vietnam’s Personal Income Tax (PIT): How It Works and the Calculation Steps — Explained Clearly with Deductions and Tax Rates
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Vietnam National Assembly Passes Amendment to the Personal Income Tax Law — Effective July 1, 2026
