Personal Income Tax 2026

5 Immediate Changes to Help Taxpayers Preserve Income

The Vietnamese tax policy framework has been substantively amended by Decree No. 253/2026/ND-CP and Circular No. 87/2026/TT-BTC. From a legal and financial advisory perspective, these instruments not only revise tax calculation parameters but also establish a legal framework intended to optimize cash flow for employees. Effective from 01 July 2026, the new regulations require taxpayers and employers to review and adjust income composition and accompanying documentation to ensure compliance and to make full use of permitted benefits.

1.        Objective of the Revision

The following revision sets out language of a legal and operational nature, presented in a clear and practicable manner suitable for internal files or notices to employees, while preserving the meaning, substance and reasoning of the original document.

2.        Tax-Exempt Lunch Allowance Increased to VND 1.2 Million: Implementation Guidance for Benefits

Pursuant to Article 8 of Decree No. 253/2026/ND-CP, the tax-exempt ceiling for mid-shift and lunch allowances is VND 1,200,000 per person per month. To implement this provision effectively and to legitimate the receipt of such benefits, employees and employers should note the following permissible modes of payment:

a.        Cash payment: Any cash portion exceeding VND 1,200,000 per person per month shall be included in the individual’s taxable income.

b.        Provision of meals: Where an employer organizes meals directly by preparing food, purchasing meal portions or issuing meal vouchers to employees, the full value of such meals shall not be treated as taxable income, irrespective of whether the actual cost exceeds VND 1,200,000 per person per month.

Practical recommendation for employers: Rather than increasing cash lunch allowances, employers should consider organizing centralized meal provision or supplying meal vouchers to maximize tangible benefits to employees while reducing tax liabilities.

Pursuant to Article 8, Decree No. 253/2026/ND-CP: "The mid-shift and lunch allowance paid by the employer to the employee in excess of VND 1,200,000 per person per month. In cases where the employer organizes mid-shift or lunch meals for employees in forms such as direct preparation, purchase of meal portions, or issuance of meal vouchers, such meals shall not be included in the individual’s taxable income."

3.        Increase of Dependent Income Threshold to VND 3 Million: Rules and Documentation

Article 3 of Circular No. 87/2026/TT-BTC provides that the average monthly income threshold for a dependent is increased to not exceed VND 3,000,000. This change aims to respond to living cost pressures and to broaden eligibility for family circumstance deductions.

To lawfully claim a dependent, the taxpayer must prepare documentation in accordance with the regulations, including but not limited to the following:

a.        A copy of the birth certificate or the decision of adoption.

b.        A copy of the dependent’s national identification card (Citizen ID) (where issued) — this is a new requirement that must be complied with immediately.

c.        For dependents aged 18 or older with disabilities: a copy of the certificate of disability or a certification of loss of civil act capacity.

d.        For dependents enrolled in educational institutions: a copy of the student card or a written confirmation from the educational institution.

e.        Administrative note: Entitlement to the deduction may be preserved during the period awaiting high school entrance examination results (June–September) if the taxpayer submits the declaration in accordance with the guidance.

4.        Tax Incentives for High-Quality Personnel: Five-Year Exemption

Pursuant to Articles 41 and 42 of Decree No. 253/2026/ND-CP, an exemption from personal income tax for a continuous period of five years applies to specified categories of high-quality personnel. The exemption period shall be calculated continuously from the month in which income arises and shall not be split across calendar years.

The beneficiaries eligible for the incentive policies include high-quality digital industry personnel and high-tech personnel.

For high-quality digital industry personnel, the incentives apply to projects located in concentrated digital technology zones, as well as projects involving the research, development and manufacture of semiconductor chips, the development of artificial intelligence (AI) systems, and the training of the digital workforce.

For high-tech personnel, the incentives apply to research and development (R&D) activities carried out under projects included in the prioritized investment catalogue and in sectors encouraged for development in accordance with applicable laws and regulations.

Practical recommendation: Employers and eligible employees should retain documentation substantiating job titles, employment contracts, project approval documents and the dates on which income first arose in order to determine precisely the commencement date of the tax exemption.

5.        Deductions for Medical and Educational Expenses: Personalization of Actual Costs

Article 49 of Decree No. 253/2026/ND-CP provides that medical and educational expenses constitute direct deductible amounts, thereby enhancing equity in the tax base by reflecting the actual financial burdens of individual households.

The deduction caps are stipulated as follows:

a.        Medical expenses: Up to VND 23,000,000 per year (applicable to healthcare expenditures included in the national health insurance list at domestic healthcare facilities).

b.        Educational expenses: Up to VND 24,000,000 per year (applicable to tuition fees from preschool through university, vocational training and professional skills programs).

Legal advisory note: The deduction for medical expenses under Article 49 may not be combined with the tax reduction for critical illness under Article 40. Taxpayers must adopt the optimal option and retain vouchers and invoices to substantiate their choice in the event of a tax authority inquiry.

6.        Taxation of Digital Assets and Derivative Securities

The new instruments introduce tax obligations for emerging investment channels to promote legal clarity in the market:

a.        Digital assets (crypto/virtual assets): Subject to a tax rate of 0.1% on the transfer price. Recommendation: Taxpayers should maintain transaction records, receipts, cost-basis ledgers and documentation regarding the provenance of assets to support determination of cost basis and tax liabilities.

b.        Derivative securities (futures contracts): Subject to a tax rate of 0.1%. Professional investors should understand the transfer price determination formula specified in Article 5 of Circular No. 87/2026/TT-BTC in order to assess tax liabilities and prepare supporting documentation.

The formula applicable to the transfer price of a single futures contract transaction is prescribed as follows: Transfer price for a single futures contract transaction = (Settlement price x Multiplier x Quantity x Initial margin ratio) / 2. The initial margin ratio is published by the Vietnam Securities Depository and Clearing Corporation.

7.        Conclusion and Practical Recommendations

Decree No. 253/2026/ND-CP and Circular No. 87/2026/TT-BTC aim to enhance transparency of tax obligations and protect taxpayers’ rights by enabling personalized deductions and by increasing exemption thresholds consistent with economic developments. Key changes include: an increase in the tax-exempt lunch allowance, an elevated dependent income threshold, a five-year tax exemption for high-quality personnel, and clarified tax treatment for digital assets and derivatives.

Recommended actions: Before the 01 July 2026 effective date, taxpayers should review and update dependent records (particularly updating Citizen ID information for children), collate medical and educational invoices, and preserve transaction evidence related to digital assets and derivatives. Thorough preparation of documentation and adherence to evidentiary procedures are necessary conditions to secure entitlements and to mitigate risks in the event of tax authority audits.

General notes:

• The above is summarised from the current legislations and practices for internal reference only.

• This document cannot be relied upon by any other parties nor included in any submissions, reports, documents or letters required by the relevant regulatory bodies without our prior written consent and/or subject to our approval on the appropriate form and contents; and

• Please kindly noted that SP&A is not a legal firm, our comments provided under this document may include reviewing regulatory documents to be identified as general management consultancy, therefore, should not be considered, nor intended to be, a legal advice.