According to Resolution No. 954/2020/UBTVQH14, the personal allowance is VND 11 million/month (VND 132 million/year) for the taxpayer themselves; and VND 4.4 million/month for each dependent of the taxpayer.

With the above deductions, individuals earning 17 million VND/month (with 1 dependent) or 22 million VND/month (with 2 dependents) from salaries and wages are not yet required to pay personal income tax.

In cases where an individual has a higher income, the amount of tax payable is still very small compared to that income.

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The current personal allowance for calculating personal income tax is applied according to Resolution No. 954/2020/UBTVQH14. Photo: Nam Khanh

The principle for calculating personal income tax is as follows: personal income tax amount = (total income - insurance - family allowance) x personal income tax withholding rate.

Let's assume an individual earns 17 million VND per month in salary and has one dependent. After deducting social insurance, health insurance, unemployment insurance, etc., they would not be subject to personal income tax.

For this individual, the mandatory insurance contribution 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 personal allowance 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, which is higher than the total income.

With one dependent, if an individual earns 18 million VND, after deducting 1.89 million VND for insurance and 15.4 million VND for family allowances, and multiplying by a personal income tax withholding rate of 5%, the tax payable would be 35,000 VND per month. This tax amount is very small compared to an income of 18 million VND per month, accounting for only about 0.19% of the individual's total income.

Will the personal allowance increase in October 2025?

The amended Personal Income Tax Law of 2012 stipulates: “In cases where the consumer price index (CPI) fluctuates by more than 20% compared to the time the Law came into effect or the time of the most recent adjustment of the personal allowance, the Government shall submit to the Standing Committee of the National Assembly a proposal to adjust the personal allowance stipulated in this clause to reflect the price fluctuations, to be applied to the next tax period.”

Accordingly, adjustments to the personal allowance can only be made when the cumulative change in the consumer price index (CPI) over the years exceeds 20%.

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

Therefore, in 2025, if the CPI fluctuates significantly, the 50th session of the National Assembly Standing Committee in October 2025 may include a resolution on increasing the personal allowance deduction.