Proposal to raise dependent income threshold for personal income tax to 3 million dong per month from July 1, 2026

A draft Circular guiding the implementation of certain provisions of the Personal Income Tax Law proposes raising the income threshold used to identify dependents for the family circumstance deduction to 3 million dong per month. The change would replace the current 1 million dong per month limit, which has been in place since 2013 and has not been adjusted for more than a decade.

Proposed change to the dependent income threshold

Under current regulations, a person is considered a dependent if they have no income or have income from all sources but their average monthly income in a year does not exceed 1 million dong.

The Ministry of Finance’s draft Circular would increase the average monthly income criterion for dependents to 3 million dong. The Ministry notes that the proposed increase of 2 million dong is higher than the rise in per capita consumption expenditure and per capita income from 2014 to the present and projected for several upcoming years. It is also higher than the urban poverty income threshold defined in Decree No. 351/2025/ND-CP.

Economic and policy rationale

The draft argues that maintaining the 1 million dong threshold is no longer appropriate given changes in living costs and income levels. If the threshold remains unchanged, the dependent identification criterion would become outdated and would not reflect current economic conditions.

Statistics cited in the draft show:

• Per capita expenditure in 2024: about 2.977 million dong per month, up about 1.6 times from 1.888 million dong in 2014.
• Per capita income: 5.15 million dong per month, nearly double the 2.637 million dong a decade ago.

The draft also links the adjustment to the national multidimensional poverty standard for 2026–2030, noting that the income level used to determine poverty and near-poverty status—particularly in urban areas—has been increased. On that basis, raising the dependent income threshold to 3 million dong per month is considered appropriate to ensure coherence across the policy framework.

Income basis and dependent groups covered

The Tax Policy Department proposes that the income basis for determining dependents be equivalent to the income basis used to determine urban poor and near-poor households.

Beyond the income criterion, the draft clarifies the groups of individuals counted as dependents, including:

• Biological or legally adopted children; illegitimate children of the taxpayer
• Spouse of the taxpayer
• Biological parents and parents of the spouse
• Stepfather and stepmother
• Foster parents under the law

Special cases also include an adult child over 18 who has lost civil act capacity, a person with a disability, or a person unable to work. A child studying at universities, colleges, vocational schools, or high school is also eligible, including the period waiting for exam results from June to September of the year of grade 12.

Administrative procedures and data use

The draft emphasizes that taxpayers must self-register and update dependents, and are responsible for the accuracy of declared information. Taxpayers must determine and declare dependents’ income truthfully; misreporting will be handled in accordance with regulations.

Based on taxpayers’ tax registration information, tax authorities will access and use data from the National Public Service Portal, the Administrative Procedure Handling Information System, the National Database, and sectoral databases managed by state agencies, shared and exploited under the law, to determine whether dependents are eligible for family circumstance deductions. If the tax authority cannot access or use the data, taxpayers must provide relevant documents.

Effective date

The draft Circular is expected to take effect from July 1, 2026. The adjustment is intended to help ensure personal income tax policy reflects real-life conditions and better supports taxpayers in applying the family circumstance deduction.