Update on New Personal Income Tax Regulations Effective from Tax Year 2026

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Faro Vietnam would like to share with you an update on the key changes to Personal Income Tax (PIT) regulations applicable to employment income under Decree No. 253/2026/ND-CP and Circular No. 87/2026/TT-BTC.

The update covers several significant changes, including the increased non-taxable meal allowance threshold, expansion of PIT-exempt benefits, revised regulations on casual income, dependent registration requirements, deductible expenses, and PIT finalization obligations.
These changes may have a direct impact on payroll processing, tax withholding procedures, and employee tax administration from the 2026 tax year onward.

 

No. Item

Regulations
1 Meal Allowance The non-taxable meal allowance for employees has officially been increased to VND 1,200,000 per employee per month
2 Housing Benefit from Employer Constructed Accommodation The scope of application has been expanded (no longer limited to employees working in industrial parks or economic zones), and the geographical condition has been removed (no longer restricted to areas with difficult or exceptionally difficult socio-economic conditions). Any housing benefit arising from accommodation constructed by the employer for employees working at the entity shall not be included in the employee’s taxable income for PIT purposes
3 Severance Allowance and Job Loss Allowance Severance allowance and job loss allowance exceeding the statutory level shall not be included in the employee’s taxable income, provided that such additional payments are specifically stipulated in the company’s financial regulations, internal policies, labor contracts, or collective labor agreements.
4 Salary and Wages for Night Work,
Overtime Work, and Payment for
Unused Annual Leave		 PIT exemption applies to salary and wage income received for night work, overtime work, and payments for unused annual leave days in accordance with the provisions of law.
5 Casual Income • The threshold for 10% PIT withholding on casual income has been increased to VND 5,000,000 per payment.
• For casual income below VND 5,000,000 per payment, PIT may still be withheld at 10% if requested by
6 Income Paid after Termination of
Labor Contract		 Specific regulations have been introduced regarding the application of a 10% PIT withholding rate on income payments (from VND 5 million per payment or more) made to employees after termination of their labor contracts.
7 Deductions

i) Contributions to Supplementary Pension Insurance and Life Insurance: Contributions to supplementary pension insurance under the Law on Social Insurance, voluntary pension insurance, and life insurance purchased for employees (including both employer and employee contributions) are deductible from taxable income up to VND 3 million per month.
ii) Medical Examination and Treatment Expenses: Medical examination and treatment expenses incurred by taxpayers and their dependents at domestic healthcare facilities within the scope covered by health insurance are deductible up to VND 23 million per year. 

iii) Education and Training Expenses: Education and training expenses incurred by taxpayers and their dependents at domestic educational institutions are deductible up to VND 24 million per year.
8 Dependent Registration • The deadline for dependent registration and ubmission of supporting documents is standardized as no later than 31 December of the applicable tax year.
• The maximum income threshold used to determine dependent status has been increased to VND 3 million per month.
• A dependent with no working capacity is specifically defined as a person with a work capacity reduction of 81% or more and must have supporting documentation.
9 PIT Finalization Individuals are not required to conduct PIT finalization for additional income earned from another source if such income does not exceed an average of VND 15 million per month during the year and the income-paying organization or individual has already withheld PIT at 10%. 
10 Conversion of Taxable Income Received in Foreign Currency into Vietnamese Dong where the Income-Paying Entity and the Income Recipient Do Not Maintain Bank Accounts in Vietnam The exchange rate applied shall be the central exchange rate between the Vietnamese Dong and the US Dollar, or the cross-exchange rate between the Vietnamese Dong and other foreign currencies, as announced by the State Bank of Vietnam at the time the income arises.

 

Note: The PIT regulations applicable to salary and wage income shall be effective from the 2026 tax period. The revised meal allowance provision shall take effect from 1 July 2026.

 

Should you require any assistance in assessing the impact on your organization or implementing the new requirements, please do not hesitate to contact us.

 

Faro Vietnam

HANOI HEAD OFFICE

  • Tel: + 84 24 3974 3091

HO CHI MINH CITY OFFICE

  • Tel: + 84 28 3821 4654

 

 

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