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On December 10, 2025, the National Assembly officially passed the amended Law on Personal Income Tax. One of the most notable changes is the reduction of the progressive PIT rate structure from 7 brackets to 5 brackets, applicable to salary and wage income of resident individuals from the 2026 tax period.
This reform is widely regarded as a significant adjustment aimed at reducing the tax burden on salaried employees, particularly those in the middle- and upper-middle-income groups.
Under the amended Law on Personal Income Tax, the 2026 progressive PIT schedule is as follows:
| Tax Bracket | Taxable Monthly Income | Tax Rate |
|---|---|---|
| Bracket 1 | Up to VND 10 million | 5% |
| Bracket 2 | Over VND 10 – 30 million | 10% |
| Bracket 3 | Over VND 30 – 60 million | 20% |
| Bracket 4 | Over VND 60 – 100 million | 30% |
| Bracket 5 | Over VND 100 million | 35% |
This schedule fully replaces the 7-bracket structure currently applied under Circular 111/2013/TT-BTC and serves as the official basis for PIT calculation from January 1, 2026.
According to the implementation provisions of the amended PIT Law:
The Law takes effect from July 1, 2026;
Salary and wage income of resident individuals is applied retroactively from the 2026 tax period, i.e., from January 1, 2026.
Accordingly:
Employers must withhold PIT using the new tax brackets starting January 2026;
Individuals will conduct 2026 PIT finalization between January 1 and March 31, 2027.
According to the Ministry of Finance, this reform aims to:
Simplify PIT calculation;
Reduce “bracket jumps” that previously caused sudden increases in tax liability;
Ensure that all taxpayers pay less tax compared to the current system.
Notably, two tax rates are significantly reduced:
15% → 10%
25% → 20%
This change substantially lowers the monthly tax payable for middle- and upper-middle-income earners.
The maximum tax rate of 35% is retained under Bracket 5. The Ministry of Finance considers this rate consistent with international practices, as many ASEAN countries such as Thailand, Indonesia, and the Philippines apply similar rates, while China applies rates up to 45%.
Reducing the top rate to 30% could be perceived as a tax cut favoring high-income earners. However, experts suggest that income thresholds for the 35% rate may be further adjusted in the future to better reflect Vietnam’s actual income levels.
According to tax and legal experts:
Middle-income earners (Brackets 2 and 3) benefit the most;
Lower PIT increases net income and consumption capacity;
The reform supports long-term budget sustainability through economic growth.
The new PIT schedule aligns with global trends supporting the middle class, a key driver of domestic consumption and economic development.
Employers should update payroll and PIT withholding systems;
Employees should regularly review monthly tax withholdings;
Individuals with multiple income sources must pay close attention to annual tax finalization to avoid underpayment or overpayment.
GIVLAW provides comprehensive support for businesses and individuals, including:
Consulting on the application of the 2026 PIT schedule;
Reviewing salary and wage PIT withholdings;
PIT finalization consulting for individuals and foreign employees;
Legal consulting on labor, wages, and income tax.
