Experts say medical and education expense tax deductions should be raised to over 100 million VND per year

Experts say the proposed maximum deduction for medical and education expenses under Vietnam’s personal income tax remains too low and should be raised. Under the Ministry of Finance’s proposal for the 2026 tax period, in addition to the existing monthly standard deductions of 15.5 million VND for the taxpayer and 6.2 million VND for each dependent, taxpayers would be eligible for a maximum annual deduction of 47 million VND for medical and education costs.

Proposal and expert concerns

Many experts view the move as aligning tax policy more closely with real living costs. However, they argue the ceiling does not fully reflect higher education costs in major cities and rising medical expenses, particularly for families facing out-of-pocket spending.

Dr. Nguyen Ngoc Tu, former head of the General Department of Taxation and a lecturer at Hanoi University of Business and Technology, said medical costs should be separated into two groups. For catastrophic illnesses listed by the Ministry of Health, he suggested allowing full deduction of actual costs based on invoices, given the social safety nature of such cases. For ordinary illnesses, he proposed a maximum deduction of about 4 million VND per month (roughly 50 million VND per year) to share some costs between the state and citizens.

For education expenses, Dr. Tu proposed a maximum deduction of about 5 million VND per month (roughly 60 million VND per year), arguing it is consistent with education being a national strategic priority for the future.

“Over the long term, I propose allowing medical and education expense deductions to be based on actual costs and valid invoices when the budget permits. The policy should expand its scope to include both domestic and international study and treatment costs, not solely domestic costs. It should also promote lifelong learning, including language, arts, physical education, and soft skills to improve the quality of the workforce and living standards.”

Policy rationale and implementation risks

Lawyer Nguyen Van Dua, a permanent member of the Vietnam Tax Advisory Council, said the proposal reflects an effort to reposition tax policy beyond revenue collection—using it also to regulate behavior and support sustainable development in a transitioning economy.

He noted that spending on health and education is not only consumption but also a long-term investment in human capital. Including these two elements in the deduction mechanism, he said, is reasonable and helps the tax system better align with international practices.

At the same time, Mr. Dua said the proposed maximum of 47 million VND per year may not meet rising living costs, especially in large urban areas. He suggested raising it to around 50–60 million VND for education and around 60 million VND for health.

He also highlighted that the policy’s impact depends on implementation. If proof procedures are complicated or lack data integration, taxpayers could face difficulties. A digital, interconnected data approach among health, education, and tax authorities, he said, would reduce burdens and improve transparency.

Data and cost benchmarks

Some citizens argue that rising living costs for health and education are driving demand for higher deductions. For example, households with multiple dependents said the proposed 23 million VND per year for health and 24 million VND per year for education do not reflect real costs.

Data for 2024 show average health expenditure per person of around 3.5 million VND, inpatient costs of around 10.2 million VND, and education expenditures of around 9.6 million VND per person. With a taxpayer-to-dependant ratio of 0.8, total spending on these two services was estimated at about 20.4 million VND per year for health and 19.2 million VND per year for education. The figures are cited as a basis for determining deduction levels.

Next steps

The Ministry of Finance is still collecting feedback and said it will revise the proposal accordingly before submitting it to the competent authority.