Vietnam Personal Income Tax 2026: What Changed for Employees and Employers

Vietnam personal income tax 2026 is the biggest reset of salary taxation in more than a decade. Most employees now take home more, but only if payroll applies the new rules correctly. If you employ people in Vietnam directly or through an EOR Vietnam provider, this is what changed, from when, and what to check before year-end.

The legal basis, in one place

Three documents shape PIT on salaries in 2026:

• Law on Personal Income Tax No. 109/2025/QH15, passed on 10 December 2025. It takes effect on 1 July 2026, but the rules on employment income of resident individuals apply to the whole 2026 tax year.
• Resolution 110/2025/UBTVQH15, which raises the family deductions, applied from the 2026 tax period.
• Decree 253/2026/ND-CP and Circular 87/2026/TT-BTC, both dated 30 June 2026 and effective 1 July 2026, which give the detailed rules.

In practice: the new brackets and deductions apply from January 2026. Monthly filings already made for January to June 2026 do not need to be resubmitted. The difference is settled in the 2026 annual finalization.

Five brackets instead of seven

The progressive table for resident employees now has five bands. The top rate stays at 35%, but it starts at a higher income level.

Monthly taxable income (VND)	Rate
Up to 10,000,000	5%
Over 10,000,000 to 30,000,000	10%
Over 30,000,000 to 60,000,000	20%
Over 60,000,000 to 100,000,000	30%
Over 100,000,000	35%

Non-residents (fewer than 183 days in Vietnam in the year, and no habitual residence) still pay a flat 20% on Vietnam-sourced employment income, with no family deductions.

Higher family deductions

• Personal deduction: VND 15,500,000 per month (VND 186 million per year), up from VND 11 million.
• Dependant deduction: VND 6,200,000 per month per dependant, up from VND 4.4 million.
• Dependants must be registered by 31 December of the tax year under Decree 253.

Employees with children or parents they support should register them now. A missing registration is a common reason an employee overpays.

New exemptions and deductions employers should apply

Decree 253 adds several items that change how payroll is calculated:

• Overtime and night work: the whole salary paid for lawful overtime and night work is now exempt, not only the premium above normal pay.
• Pay for untaken annual leave: compensation for leave days not taken is exempt if it follows the Labour Code. Any amount above the legal level is taxable.
• Meal allowance: exempt up to VND 1,200,000 per employee per month from 1 July 2026. Meals provided directly or as vouchers are not counted as income.
• Voluntary pension and life insurance: deduction cap raised to VND 3,000,000 per month.
• Health and education costs: resident taxpayers can deduct up to VND 23 million per year for healthcare covered by health insurance and up to VND 24 million per year for tuition and training in Vietnam, claimed at finalization with valid invoices.
• Short-term payments: the 10% withholding on payments to people without a labour contract (or with one under three months) now applies from VND 5,000,000 per payment, up from VND 2 million.

Worked example: what an employee pays now

Two employees in Ho Chi Minh City (Region I). Employee insurance is 8% SI + 1.5% HI on salary capped at VND 46,800,000, and 1% UI. "2025 rules" uses the old seven-bracket table and old deductions, for comparison only.

	Employee A	Employee B
Gross monthly salary	30,000,000	60,000,000
Dependants	1	0
Employee insurance (10.5%, capped)	3,150,000	5,046,000
Taxable income, 2026 rules	5,150,000	39,454,000
Monthly PIT, 2026 rules	257,500	4,390,800
Monthly PIT under 2025 rules	967,500	7,738,500
Monthly saving	710,000	3,347,700

For Employee B, the SI and HI base is capped at VND 46.8 million, so insurance is 3,744,000 + 702,000 + 600,000 = 5,046,000 VND. Taxable income is 60,000,000 − 5,046,000 − 15,500,000 = 39,454,000 VND. Tax is 500,000 + 2,000,000 + 20% × 9,454,000 = 4,390,800 VND.

The employer's cost does not change because of PIT. It is the employee's net pay that rises. That matters if you set salaries as net amounts: with a net-pay promise, the employer carries any tax difference, so recheck gross-up formulas.

What to do before the 2026 finalization

1. Check the January–June gap. Withholding in the first half of 2026 may have used old settings. The difference will appear at finalization, often as a refund for the employee.
2. Collect dependant registrations before 31 December 2026.
3. Update payroll codes for overtime, untaken leave pay and meal allowance from the right dates.
4. Tell employees about the health and education deductions and which invoices they need to keep.
5. Review net-salary contracts and offer letters for gross-up effects.

For foreign companies, this is part of the true EOR cost question. A good EOR Vietnam provider should apply these rules on time and explain the changes to your team, not just send an invoice.

Key takeaways

• New brackets and deductions apply to the full 2026 tax year; Law 109/2025/QH15 itself took effect on 1 July 2026.
• Five brackets: 5/10/20/30/35%, with the top rate above VND 100 million per month.
• Personal deduction VND 15.5 million, dependant VND 6.2 million per month.
• Overtime and night-work pay is now fully exempt; meal allowance exempt up to VND 1.2 million per month from 1 July 2026.
• Employer cost is unchanged; employee net pay usually rises. Net-salary contracts need a recheck.

How HR4U can help

HR4U runs payroll and PIT for teams in Vietnam under a licensed labour outsourcing framework (licence No. 24/2023/SBD). Our EOR service starts from USD 109 per employee per month, with statutory costs passed through at cost, no setup or offboarding fee, and monthly USD invoicing. We work proactively: we flag rule changes like these before they affect your payslips. View EOR in Vietnam or talk to us.

This article is for general information and reflects rules in effect as of October 2026. It is not legal or tax advice.