The amended Law on Personal Income Tax, effective from January 1, 2026, significantly expands tax-exempt income. Some income items excluded from taxable include transferring real estate, which is the only house or land; inheritance, gifts of real estate; value of land use rights assigned by the State. Income from agriculture, salt, seafood, and primary forestry, along with interest on government bonds, interest on bank deposits, interest, pensions, and scholarships, all continue to be exempted from tax.
A major change is in the household and individual business areas. The law stipulates that households with a revenue of VND500 million/year or less do not have to pay personal income tax. At the same time, it is allowed to deduct this rate before calculating tax according to the rate on revenue. With this regulation, most small households will not have to pay taxes. For the group of business households subject to tax, tax obligations have also decreased significantly.
With a revenue of over VND500 million to VND3 billion/year, the applicable tax rate is 15%; revenue over VND3 billion to VND50 billion/year is subject to a tax rate of 17%; revenue over VND50 billion/year is subject to 20%. The law also adds a method of calculating tax on income (revenue minus expenses) for groups with revenue over VND500 million to VND3 billion/year, creating flexible options for taxpayers.
Mr. Le Van Tuan - Director of Keytas Tax Accounting Company Limited - said that the new level ensures fairness relatively to taxes applied to other types of income. He also emphasized the need to clearly distinguish VAT and personal income tax: "GHT tax is the amount of money collected by business households for the State, while personal income tax only arises when there is a profit".
Mr. Tuan gave an example: A household with a revenue of 1 billion VND/year, if the cost is also at 1 billion VND, does not generate income for personal income tax calculation, but still has to pay 10 million VND in VAT (1% of revenue). With the new regulation, households are entitled to a deduction of VND 500 million before tax is calculated. The taxable revenue is still VND 500 million, applying a tax rate of 1.5% to this revenue group, the tax payable is only VND 7.5 million/year.
According to Mr. Tuan, such a design reduces the gap between households with low profits and households without profits, while avoiding creating new burdens.
Meanwhile, Dr. Nguyen Ngoc Tu, lecturer at Hanoi University of Business and Technology, noted that raising the tax exemption threshold will cause about 2.3 million households out of a total of more than 2.54 million business households to not have to pay taxes. He suggested that the Ministry of Finance "carefully survey the actual revenue structure to ensure the policy of both nurturing revenue and maintaining fairness".
