The Ministry of Finance has just submitted to the Government a plan to adjust the family deduction for personal income tax (PIT). According to the proposal, the family deduction for taxpayers will be increased from 11 million VND/month to 15.5 million VND/month. The deduction for each dependent person also increased from 4.4 million VND/month to 6.2 million VND/month, an increase of about 40.9%.
According to the calculation of the Ministry of Finance, raising the family deduction level will directly affect millions of people working for hire. The most obvious benefit belongs to the middle- and low-income groups. Most people who are currently in the top will switch to non-taxable status.
For example, an individual with a salary of 15 million VND/month will not have to pay personal income tax. For those with an income of VND20 million/month, after deducting family deductions and compulsory insurance, the tax payable is only VND120,000/month, equivalent to 0.6% of total income.
In case the employee receives a salary of VND 25 million/month and has one dependent, the tax payable will be reduced to VND 33,750/month. If the income is 30 million VND/month, the corresponding tax rate is 265,000 VND.
Notably, with the same income but two dependents, individuals will not have to pay taxes thanks to the total deductions (family allowance, insurance, dependence) of up to 31.05 million VND.
High-income groups also have reduced tax obligations, although the absolute benefits are greater, the reduction rate compared to low-income groups is not as good.
For example, one person with an income of VND 80 million/month and one dependent are currently paying more than VND 13.53 million in taxes. If the new family deduction level is applied, the tax amount will be 11.64 million VND, down 1.89 million VND.
For people with an income of VND 100 million/month and one dependent, personal income tax is currently VND 19.76 million/month. When adjusting the deduction, the tax amount will be reduced to 17.64 million VND, saving about 2.1 million VND.
According to the Ministry of Finance, raising family deductions is in line with the context of increasing living expenses, while helping to share the burden with salaried workers. This adjustment, if approved by the National Assembly, will create more financial space for households, contributing to stimulating consumption and promoting economic growth.
However, raising the deduction for family deductions also means that the budget revenue from personal income tax will decrease. The Ministry of Finance believes that it is necessary to carefully balance between supporting people and ensuring resources for the state budget, in which social security is still put first.
