COMPARISON TABLE OF NEW AND OLD PERSONAL INCOME TAX LAWS

Personal Income Tax Law No. 109/2025/QH15 officially takes effect from July 1, 2026, replacing Personal Income Tax Law No. 04/2007/QH12 after nearly 17 years of application. This is one of the comprehensive amendments aimed at updating tax policies in line with the current socio-economic context, while creating more favorable conditions for taxpayers and enhancing tax administration efficiency.

Notably, although the Law takes effect from July 1, 2026, provisions related to income from salaries, wages, and business activities of resident individuals apply to the entire tax period of 2026. This means that the tax finalization for 2026 will be carried out according to the new provisions for applicable income.

Below are the prominent changes in the new Personal Income Tax Law compared to current regulations:

1. Adjustment of the partially progressive tax schedule

The new Law streamlines the progressive tax schedule from 7 brackets to 5 brackets, while adjusting the taxable income ranges for each bracket. This simplification helps taxpayers more easily determine their tax obligations and better reflects current actual income levels.

2. Increase in family deductions

Family deductions are adjusted as follows:

• Taxpayer: increased from 11 million VND/month to 15.5 million VND/month (186 million VND/year).
• Each dependent: increased from 4.4 million VND/month to 6.2 million VND/month.

This is a significant adjustment to align with changes in living costs and help reduce the tax burden on employees.

3. Addition of deductions for medical and educational expenses

For the first time, the Law allows taxpayers to deduct medical expenses and education-training expenses for themselves and their dependents at a level stipulated by the Government.

To apply this deduction, taxpayers must meet legal conditions, including having full valid invoices and documents, and the expenses must not be paid from other sources. The new regulation provides a legal basis for recognizing essential living expenses when determining taxable income.

4. Expansion of tax exemption for overtime and night work pay

Under current regulations, only the higher portion of wages paid for overtime or night work is tax-exempt.

Under the new Law, the scope of tax exemption is expanded to include:

• Night work wages;
• Overtime wages;
• Wages and salaries paid for non-leave days as stipulated by law.

This expansion contributes to increasing the actual net income of employees and is more consistent with policies encouraging labor productivity.

5. Changes in tax calculation methods for business households

The new Law gradually shifts from revenue-based taxation to income-based taxation (revenue minus expenses) for business households with revenue exceeding the threshold stipulated by the Government.

For business households with revenue up to 3 billion VND/year, the Law allows them to choose to continue paying tax based on a percentage of revenue or apply the income-based calculation method. Concurrently, the Law also adds specific regulations for e-commerce activities, digital platforms, and real estate leasing.

6. Refinement of regulations on capital and securities transfer

For capital transfer activities, the Law maintains a tax rate of 20% on taxable income. However, if the purchase price and related expenses cannot be determined, a tax rate of 2% on the transfer price applies.

For securities transfer, a tax rate of 0.1% on the transfer price continues to be maintained.

In addition, the Law adds preferential policies such as:

• Tax exemption for transfer of legitimate open-ended fund certificates held for 2 years or more;
• 50% personal income tax reduction for profits from securities investment funds and real estate investment funds.

7. Increase in taxable thresholds for certain income types

The Law raises the taxable threshold from 10 million VND to 20 million VND for income from:

• Prizes;
• Royalties;
• Franchising;
• Inheritance;
• Gifts.

Meanwhile, the tax rates for these income types remain unchanged according to current regulations.

8. Addition of regulations for digital assets and gold bars

A notable new point is that the Law has added a tax management mechanism for various new types of assets, including:

• Transfer of national domain names ".vn";
• Carbon credits and emission reduction results;
• Auctioned vehicle license plates;
• Digital assets, applying a tax rate of 0.1% on the transfer price per transaction;
• Gold bars, applying a tax rate of 0.1% on the transfer price, according to a roadmap stipulated by the Government.

9. Expansion of tax-exempt income types

The Law adds many more types of tax-exempt income, including:

• After-tax income of private enterprise owners and single-member limited liability company owners;
• Income from overtime wages, night work, and wages paid for non-leave days;
• Income of high-tech personnel participating in high-tech research and development or strategic technology for a period of 5 years;
• Income of ODA experts, individuals working at representative offices of the United Nations in Vietnam, and UN peacekeeping forces;
• Interest from local government bonds, green bonds, carbon credits, and greenhouse gas emission reduction results;
• Income paid by supplementary retirement insurance funds.

10. Transitional provisions

The Law clearly stipulates:

• Income arising from individual transactions such as capital transfer, real estate, inheritance, gifts, digital assets, etc., applies new regulations to transactions arising from July 1, 2026.
• Specifically for income from salaries, wages, and business activities, the new regulations apply to the entire tax period of 2026.

Therefore, the tax provisionally withheld in the first 06 months of 2026 under the old regulations will be reassessed during the 2026 tax finalization, and in many cases, taxpayers may be entitled to a tax refund.

OPLAW recommends that businesses, income-paying organizations, business households, and individuals proactively review the new regulations to promptly adjust their tax declaration, withholding, and finalization plans, and to monitor guiding decrees and circulars to ensure compliance with legal provisions.

This article is for informational purposes only and should not be considered legal advice for any specific case.

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