Important changes in personal income tax law from 2026
In the context of a volatile economy and increasing cost of living, updating tax regulations is essential for every employee. According to the roadmap for amending legal documents, it is expected that the Personal Income Tax (PIT) Law will have major adjustments to ensure the rights of taxpayers. Understanding the Latest PIT calculation method from 2026 not only helps you be proactive in managing personal finances but also helps optimize actual monthly take-home income.
The Ministry of Finance is studying a proposal for the National Assembly to consider amending the PIT Law, focusing on adjusting family relief levels and tax brackets in the progressive tax table. These changes are expected to reduce the tax burden for middle and low-income groups while reflecting the current living standards of the people. To avoid being overwhelmed by new regulations, you need to carefully study the formula and specific application conditions.
Below is a detailed summary article on the calculation method, deductions, and important notes that any employee needs to know about personal income tax in the coming period.
Latest PIT calculation formula from 2026
Basically, the PIT calculation for income from salaries and wages still follows the progressive principle. The general formula is determined as follows:
- PIT payable = Assessable income x Tax rate
- Assessable income = Taxable income – Deductions
- Taxable income = Total income – Tax-exempt items
In which, the components making up the tax amount payable are explained in detail as follows:
1. Taxable income
This is the total amount of salaries, wages, allowances, subsidies, and bonuses that employees receive from employers. However, not all income is subject to tax. Some allowances according to state regulations (such as toxic hazard allowances, regional allowances, mid-shift meal allowances within limits) will be excluded from taxable income.
2. Deductions
This is the most important part of the latest PIT calculation from 2026. Deductions include:
- Family relief: Includes deduction for the taxpayer themselves and deductions for dependents (children, elderly parents, relatives unable to work). This deduction level is expected to be adjusted upward compared to the current level to match the Consumer Price Index (CPI).
- Insurance contributions: Social insurance, health insurance, unemployment insurance, and professional liability insurance for certain professions.
- Charitable, humanitarian, and study promotion contributions: These expenses must have legal vouchers from state-licensed organizations.
- Contributions to voluntary pension funds: According to the maximum level prescribed by law.
Expected partially progressive tax table to be applied
PIT on income from salaries and wages is calculated according to a progressive tax table, meaning the higher the income, the higher the tax rate. Currently, the tax table consists of 7 brackets with rates from 5% to 35%. In the reform roadmap from 2026, experts propose shortening the number of tax brackets or widening the gap between brackets to prevent employees from falling into higher tax brackets immediately after a salary increase.
Below is an illustration of the current tax brackets (income frames may be adjusted in 2026):
- Level 1: Income up to 5 million VND/month – 5% tax rate
- Level 2: Over 5 million to 10 million VND/month – 10% tax rate
- Level 3: Over 10 million to 18 million VND/month – 15% tax rate
- Level 4: Over 18 million to 32 million VND/month – 20% tax rate
- Level 5: Over 32 million to 52 million VND/month – 25% tax rate
- Level 6: Over 52 million to 80 million VND/month – 30% tax rate
- Level 7: Over 80 million VND/month – 35% tax rate
Detailed guide to PIT calculation steps
To help you visualize, follow these steps to determine the tax you need to pay:
Step 1: Determine total actual income
Add up all fixed salaries, overtime pay, sales bonuses, holiday bonuses, and various allowances received during the month.
Step 2: Remove tax-exempt income
Subtract items such as: mid-shift meal allowance (not exceeding the prescribed limit), uniform allowance, insurance compensation, and the portion of night shift or overtime pay that is higher than the daytime salary.
Step 3: Calculate deductions
Determine the family relief for yourself (e.g., the expected new level) and the number of validly registered dependents. Add mandatory insurance contributions deducted from your salary (usually 10.5% of the salary used for insurance contributions).
Step 4: Calculate assessable income
Take Taxable Income (Step 2) minus Total Deductions (Step 3). If this number is less than or equal to 0, you do not have to pay PIT.
Step 5: Apply the progressive tax table
Use the simplified calculation method or calculate by each bracket to arrive at the final figure. Currently, most accountants use the simplified method to quickly determine the tax amount.
Specific illustrative example
Assume that in 2026, an individual has a total income of 30 million VND/month. Mandatory insurance is 2 million VND. This individual has 1 dependent. Assume the new family relief for the individual is 15 million VND and for the dependent is 5.5 million VND.
The calculation is as follows:
- Taxable income: 30 million VND.
- Total deductions: 15 (self) + 5.5 (dependent) + 2 (insurance) = 22.5 million VND.
- Assessable income: 30 – 22.5 = 7.5 million VND.
- Tax payable:
- Level 1: 5 million x 5% = 250,000 VND.
- Level 2: (7.5 – 5) x 10% = 250,000 VND.
- Total: 500,000 VND/month.
Important notes on 2026 PIT finalization
Besides monthly tax calculation, employees should pay attention to the tax finalization procedures at the end of the year. This is the time to re-determine the total tax payable for the whole year based on actual total income.
Authorization for tax finalization
If you have only one source of income from a single paying unit and have worked there for a full 12 months, you can authorize the company to finalize on your behalf. This saves time and avoids errors in the documentation.
Self-finalization of tax
In case you have income from two or more places or have overpaid tax and want a refund, you must directly perform the finalization with the tax authority. Currently, finalization can be done online through the Electronic Tax system (eTax), which is very convenient and transparent.
Submission deadline
Typically, the deadline for PIT finalization for individuals who self-finalize is the last day of the 4th month from the end of the calendar year. You should prepare your application early to avoid system overload in the final days.
Conclusion
Understanding the latest PIT calculation method from 2026 is the right and responsibility of every citizen. Future adjustments to deduction levels and tax brackets promise to bring more fairness to employees, helping people have more financial resources to improve their quality of life. Always follow official announcements from tax authorities to update the latest changes in tax policy in Vietnam.
Hopefully, this article has provided you with the most comprehensive and detailed look at how to calculate personal income tax. If you have any questions about dependent profiles or deductions, do not hesitate to consult financial experts or professional accountants.