Which wages and salaries are subject to personal income tax in Vietnam in 2025?

Which wages and salaries are subject to personal income tax (PIT) in Vietnam in 2025?

According to Clause 2, Article 3 of the Personal Income Tax Law 2007 (amended by Clause 1, Article 1 of the Amended Personal Income Tax Law 2012) regarding income from wages and salaries subject to PIT, as follows:

Article 3. Taxable Income

Income subject to personal income tax includes the following types of income, except for tax-exempt income as stipulated in Article 4 of this Law:

...

2. Income from wages and salaries, including:

a) Wages, salaries, and income with similar nature;

b) Allowances and subsidies, except for those: allowances, subsidies prescribed by law concerning preferential treatment for meritorious people; defense and security allowances; hazardous and dangerous allowances applicable to specific sectors, professions, or work positions with hazardous and dangerous elements; attraction allowances, regional allowances as prescribed by law; unexpected hardship subsidies, occupational accident and professional disease support, one-time childbirth and adoption subsidies, labor capacity reduction support, one-time retirement benefits, monthly survivor benefits, and other allowances prescribed by social insurance law; severance and unemployment benefits according to the Labour Code; social protection allowances and other allowances and subsidies not being salary or wage in nature as prescribed by the Government of Vietnam.

...

Therefore, the following wages and salaries are subject to PIT in 2025:

[1] Wages, salaries, and income with similar nature;

[2] Allowances and subsidies, except for:

+ Allowances and subsidies prescribed by law concerning preferential treatment for meritorious people;

+ Defense and security allowances;

+ Hazardous and dangerous allowances applicable to specific sectors, professions, or work positions with hazardous and dangerous elements;

+ Attraction allowances, regional allowances as prescribed by law;

+ Unexpected hardship subsidies, occupational accident and professional disease support, one-time childbirth and adoption subsidies, labor capacity reduction support, one-time retirement benefits, monthly survivor benefits, and other allowances prescribed by social insurance law;

+ Severance and unemployment benefits according to the Labour Code;

+ Social protection allowances and other allowances and subsidies not being salary or wage in nature as prescribed by the Government of Vietnam.

Which wages and salaries are subject to PIT in Vietnam in 2025? (Image from the Internet)

How to calculate PIT in 2025 from wages and salaries for Vietnamese residents?

The method for calculating PIT in 2025 from wages and salaries for Vietnamese residents is determined as follows:

PIT payable = Taxable income x Tax rate

In which:

[1] Taxable income:

According to Clause 1, Article 21 of the Personal Income Tax Law 2007, amended by Clause 5, Article 1 of the Amended Personal Income Tax Law 2012 (Provisions on taxation for business individuals in Clause 1 of this Article were abolished by Clause 4, Article 6 of the 2014 Law Amending Various Tax Laws), taxable income from wages and salaries is the total taxable income prescribed in Article 11 of the Personal Income Tax Law 2007, minus contributions to social insurance, health insurance, unemployment insurance, professional liability insurance for certain sectors and professions required to participate in compulsory insurance, voluntary pension funds, and deductions:

- Family circumstance deduction:

Based on Article 19 of the Personal Income Tax Law 2007, amended by Clause 4, Article 1 of the Amended Personal Income Tax Law 2012, Article 1 of the Resolution 954/2020/UBTVQH14 (Provisions on taxation for business individuals in Clause 1 of this Article were abolished by Clause 4, Article 6 of the 2014 Law Amending Various Tax Laws), the family circumstance deduction is the amount deducted from taxable income before calculating tax on business, wages, and salaries of taxpayers who are Vietnamese residents.

Family circumstance deductions include the following 2 parts:

+ Deduction for taxpayers is 11 million VND/month (132 million VND/year);

+ Deduction for each dependent is 4.4 million VND/month.

- Deductions for charitable and humanitarian contributions:

According to Article 20 of the Personal Income Tax Law 2007 (Provisions on taxation for business individuals in Clause 1 of this Article were abolished by Clause 4, Article 6 of the 2014 Law Amending Various Tax Laws), charitable and humanitarian contributions are deductible from income prior to tax calculation on business income, wages, and salaries of taxpayers who are Vietnamese residents, including:

+ Contributions to organizations or facilities caring for and nurturing children with special difficulties, people with disabilities, or the elderly without family support;

+ Contributions to charity funds, humanitarian funds, and education promotion funds.

Note: The organizations, facilities, and funds mentioned must be allowed to establish or recognized by competent state agencies to operate for charitable, humanitarian, and educational purposes, not for profit.

[2] PIT tax rate:

According to Article 22 of the Personal Income Tax Law 2007, the progressive tax schedule applied to PIT taxable income from wages and salaries for Vietnamese residents is as follows:

How is PIT in 2025 calculated from wages and salaries for non-Vietnamese residents?

According to Article 26 of the Personal Income Tax Law 2007, the method for calculating PIT in 2025 from wages and salaries for non-Vietnamese residents is determined as follows:

PIT payable = Taxable income x Tax rate

In which:

+ Taxable PIT income from wages and salaries is the total wages and salaries received by non-Vietnamese residents for conducting work in Vietnam, regardless of where income is paid.

+ The PIT rate from wages and salaries is 20%.