Personal income tax 2026: Substantial increase in deductions and the risk of missing income

Personal income tax (PIT) 2026 is drawing close attention as the new personal income tax regime takes effect with major changes to deduction allowances. As of the end of March 2026, tax authorities nationwide are supporting millions of taxpayers in filing their final tax returns, with a shift toward electronic settlement through the eTax Mobile app and the Tax Department’s online portal. In Hanoi and Ho Chi Minh City, online submissions accounted for up to 98%, reducing the need for in-person queues.

Speaking on the filing season, the head of the Hanoi Tax Department said 2026 is a “watershed year” as the new PIT law is implemented with significantly higher deduction levels. For the 2025 tax year filings conducted in Q1/2026, the old deduction level still applies, including the taxpayer deduction of 11 million dong. From the 2026 tax year onward, taxpayers will see a clear difference in net income. The official also encouraged taxpayers to use the electronic identification account (VNeID) to log into the tax system to enable linked data and faster tax refunds.

Exempt and non-taxable income categories

Correctly identifying exempt income is key to filing accurately, avoiding overpayment, and maximizing financial benefits. Non-taxable income categories highlighted include:

• Allowances and subsidies: severance pay, unemployment benefits; hazardous/dangerous allowances; regional and hardship incentives; sudden welfare fund payments.
• Financial – savings: interest on deposits at financial institutions; interest from life insurance contracts; remittance from abroad.
• Family – assets: income from transfers, inheritances, and gifts of real estate between spouses, parents and children, or siblings.
• Special income: overtime pay, night shift allowances (above regular hours), and scholarships funded by budgets or organizations domestically or internationally.

Solving the tax settlement puzzle in a multi-income environment

With a more digital economy in 2026, many workers have multiple income sources. For individuals with multiple income streams, determining tax duties and the correct declaration method is essential to reduce legal risk later.

Multiple employers and tax settlement responsibility

If a person signs a labor contract of three months or more with two or more employers, they cannot authorize another party to settle their taxes; they must settle directly with the tax authority.

Documents and filing flexibility under Decree 373/2025/NĐ-CP

Procedurally, the required documents include Form 02/QTT-TNCN and tax-withheld documents (now fully electronic) issued by the payers. Decree 373/2025/NĐ-CP, effective from early 2026, makes filing more flexible. Instead of filing only at the last employer’s place, individuals may file at any tax authority where they are registered for employment and where they receive personal tax relief. If a taxpayer has left employment and is not working anywhere at the time of filing, the submission is made to the tax authority of their residence.

Incidental income with withholding at source

For other incidental income that has had withholding at source, the law provides some flexibility for short-term, seasonal income (under 2 million dong per instance or already taxed at 10%). If the total incidental income on average per month during the year does not exceed 10 million dong, the worker may choose not to settle that income if not necessary or if they do not intend to obtain a tax refund. However, if the total tax withheld exceeds the actual tax payable, the individual must aggregate all income sources to file a joint final return so that any excess tax can be refunded.

Linked data system and declaration compliance

A key point for 2026 is the nationwide linked data system. The system will automatically detect if taxpayers forget to declare second incomes or extraneous bonuses. The article emphasizes that honesty and proactive declaration are mandatory to ensure personal financial safety.

New personal deduction levels effective January 1, 2026

Although the March 2026 settlement focuses on finalizing the 2025 tax year, taxpayers are advised to note the deduction policy changes effective January 1, 2026, as these affect provisional tax payments and help avoid overpayment or data errors.

Higher deductions for the taxpayer and dependents

Under the new policy, the deduction for the taxpayer increases from 11 million dong to 15.5 million dong per month. The deduction for each dependent rises from 4.4 million to 6.2 million dong per month. The article describes this as more than a 40% increase, intended to ease the burden on citizens and support consumption.

Impact on take-home pay and the labor market

The adjustment is expected to benefit most workers. The article provides an example: a person earning 20 million dong per month and supporting one child, after applying the new GTGC levels along with mandatory insurance, will have almost no PIT to pay. It also states that the new policy supports social welfare, increases actual take-home income, and provides an important boost to the labor market in 2026.