According to Resolution No. 954/2020/UBTVQH14, the family deduction of VND 11 million/month (VND 132 million/year) applies to the taxpayer himself; the family deduction of VND 4.4 million/month applies to each dependent of the taxpayer.

With the above deduction, people with income from salary or wages of 17 million VND/month (if having 1 dependent) or 22 million VND/month (if having 2 dependents) do not have to pay personal income tax.

In case an individual has a larger income, the amount of tax payable is also very small compared to the individual's income.

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The current family deduction level when calculating personal income tax (PIT) is applied according to Resolution No. 954/2020/UBTVQH14. Photo: Nam Khanh

Because the principle of calculating personal income tax is as follows: personal income tax amount = (total income - insurance - family deduction) x personal income tax deduction rate.

Suppose an individual has a salary and wage income of 17 million VND/month and has 1 dependent, if deducting social insurance, health insurance, unemployment insurance... will not be subject to personal income tax.

For this individual, the compulsory insurance of 10.5% (8% social insurance + 1.5% health insurance + 1% unemployment insurance) is 1.785 million VND (17 million VND x 10.5%); the family deduction is 15.4 million VND (11 million VND for the individual + 4.4 million VND for dependents); the total of these two deductions is 17.2 million VND, higher than the total income.

Also having 1 dependent, if an individual has an income of 18 million VND, minus 1.89 million VND in insurance and 15.4 million VND in family deduction, multiplied by the personal income tax deduction rate of 5%, the tax payable is 35 thousand VND/month. This tax amount is very small compared to the income of 18 million VND/month, accounting for only about 0.19% of the individual's total income.

Will family deduction increase in October 2025?

The 2012 amended Law on Personal Income Tax stipulates: “In case the consumer price index (CPI) fluctuates by more than 20% compared to the time the Law takes effect or the time of the most recent adjustment of the family deduction level, the Government shall submit to the National Assembly Standing Committee an adjustment of the family deduction level prescribed in this clause in accordance with price fluctuations to apply to the next tax period.”

Accordingly, the adjustment of family deduction level is only made when the cumulative fluctuation of consumer price index (CPI) over the years is over 20%.

From 2020 to the end of 2024, the CPI index increased by nearly 16%.

Therefore, in 2025, if the CPI index fluctuates significantly, the 50th session of the National Assembly Standing Committee in October 2025 may have a resolution related to increasing the family deduction level.