Passing the Resolution on adjusting the family deduction level of personal income tax: Reasonable and fair encouragement of income, promoting economic growth

With the adoption of the Resolution on adjusting the family deduction level of personal income tax, the members of the National Assembly Standing Committee affirmed that this is a very good political message in the current context. The adjustment of the family deduction level is also to suit the socio-economic situation and price fluctuations, contributing to reasonable and fair mobilization of income, creating motivation for taxpayers to accumulate and consume, contributing to promoting economic growth.

“Right authority, right time”

According to the provisions of the current Law on Personal Income Tax, in case the consumer price index (CPI) fluctuates by more than 20% compared to the time the Law takes effect or the time of the most recent adjustment of the family deduction level, the Government will submit to the National Assembly Standing Committee to adjust the family deduction level prescribed in this clause in accordance with price fluctuations to apply to the next tax period.

According to the Government 's calculations, by the end of 2025, the CPI index has fluctuated by more than 20% compared to the time of the most recent adjustment of the family deduction level (2020) at 21.24%. Having ensured the legal basis for adjusting the family deduction level, the Government proposed to adjust the family deduction level according to the growth rate of average income per capita and the growth rate of average GDP per capita.

On the other hand, statistics from the General Statistics Office also show that the fluctuation in average income per capita and GDP per capita from 2020 to present is about 40 - 42%. Therefore, based on the growth rate of average income per capita and GDP per capita in 2025 compared to 2020 mentioned above, the Government proposes a family deduction for taxpayers from 11 million VND/month to about 15.5 million/month (an increase of about 40.9% compared to the current level). The deduction for each dependent increases from 4.4 million VND/month to about 6.2 million VND/month (an increase of about 40.9% compared to the current level).

Vice Chairman of the National Assembly Nguyen Duc Hai chaired the meeting. Photo: Pham Thang

Agreeing with the Government's proposal, Vice Chairman of the National Assembly Nguyen Khac Dinh said that the Government's submission of this content to the National Assembly Standing Committee for consideration and approval is "within its authority" and "in line with the previously assigned program". At the same time, the National Assembly Standing Committee's consideration and approval of the Resolution on adjusting the personal income tax family deduction level for application will not be "stuck" even though the draft Law on Personal Income Tax (amended) is submitted to the National Assembly for consideration at the upcoming 10th Session.

The reason is that the issuance of this resolution will resolve current shortcomings, people will soon enjoy the policy and also be eligible for implementation when the 2025 budget is expected to exceed revenue by a lot. Meanwhile, with the draft Law on Personal Income Tax (amended), it can be adjusted in the direction of principled regulations, decentralizing the National Assembly Standing Committee to decide on the family deduction level and adjusting this deduction level, in order to quickly meet the requirements of practice.

Sharing the same view, Vice Chairman of the National Assembly Vu Hong Thanh said that the issuance of the Resolution of the National Assembly Standing Committee at the 50th Session will create a very good political message in the current context. However, the implementation time should be considered to move to early 2026. “If it can be implemented from 2025, it will be very good. But in the context of storms and floods like this, with the spirit of helping the less fortunate and sharing the difficulties of people affected by storms and floods, especially after the recent flooding incident in some northern mountainous provinces, it would be more reasonable to implement it from 2026,” the Vice Chairman of the National Assembly emphasized.

Vice Chairman of the National Assembly Nguyen Khac Dinh also said that it would be good if the personal income tax deduction level was increased from the 2025 tax period, especially when the state budget has the conditions to implement it. However, the recent storms No. 10 and 11 and the flooding in the northern mountainous provinces have caused significant damage to people and businesses. "The amount of state budget affected by the increase in the personal income tax deduction level is about 21,000 billion VND/year, which can be transferred to overcome the consequences of storms and floods," the Vice Chairman of the National Assembly suggested.

Can indirectly increase state budget revenue

According to the Government's Proposal, adjusting the family deduction level according to the growth rate of GDP per capita and per capita income will contribute to reducing tax obligations for taxpayers at a higher level than adjusting according to the CPI index, people will enjoy the fruits of the country's socio-economic development and social life will be improved. With the expected deduction level, people with lower income will benefit more.

In addition, the Government's Submission stated that when the family deduction level is higher, it also means that the amount of tax payable will be less, people's disposable income will increase, thereby contributing to stimulating increased household spending, social consumption, contributing to the development of production and business, thereby indirectly increasing state budget revenue from other sources of revenue in the medium and long term.

On the other hand, from the perspective of accounting and auditing techniques, Deputy State Auditor General Tran Minh Khuong said that according to the provisions of the Law on Personal Income Tax, declaration and settlement usually take place after the end of a year, that is, the first quarter of 2026 will be used to declare for the 2025 fiscal year. Therefore, the policy adjustment does not affect the revenue and expenditure estimates for 2025.

The Deputy State Auditor General also suggested that when amending the Law on Personal Income Tax, consideration should be given to adjusting the family deduction and tax payment levels so that they do not apply to all subjects and regions in general, as the current minimum wage is also divided by region.

Thus, with the National Assembly Standing Committee passing the Resolution at the 50th Session this time, the family deduction for taxpayers and new dependents will be over 40% higher than the current deduction. The new deduction will be adjusted in the 2026 tax period and finalized in the first quarter of 2027.

In his concluding remarks at the discussion, Vice Chairman of the National Assembly Nguyen Duc Hai affirmed that the adjustment of the personal income tax deduction for taxpayers and dependents to suit the socio-economic situation and price fluctuations will contribute to reasonable and fair mobilization of income, creating motivation for taxpayers to save and consume, contributing to promoting economic growth. And, this adjustment has also been considered in accordance with the budget balance situation in the last months of 2025 due to the impact of natural disasters and floods.

Source: https://daibieunhandan.vn/thong-qua-nghi-quyet-ve-dieu-chinh-muc-giam-tru-gia-canh-cua-thue-thu-nhap-ca-nhan-dong-vien-hop-ly-cong-bang-cac-khoan-thu-nhap-thuc-day-tang-truong-kinh-te-10390840.html