Ministry of Finance: Family deduction regardless of income or place of residence

The Ministry of Finance has sent the Ministry of Justice a dossier for appraisal of the draft Law on Personal Income Tax (amended). The draft law proposes to amend the regulations on family deductions for individual taxpayers and their dependents.

According to the Ministry of Finance , there are also opinions that it is necessary to regulate the family deduction level based on the regional minimum wage. Specifically, the family deduction level in urban areas and large cities should be higher than in rural and mountainous areas because the cost of living here is more expensive. However, the Ministry does not agree with this opinion.

The Ministry of Finance said that, according to the provisions of the law on personal income tax, the family deduction for taxpayers and dependents is determined by a specific number, applied uniformly on the general level of the whole society, regardless of whether people have high or low income, different consumption needs or live in different locations.

Personal income tax laws in many countries, including both developed and developing countries, also only provide for a general family deduction, applied uniformly, without distinction by area of residence or population group.

Family deductions regardless of income or place of residence.

For individuals working in areas with difficult conditions, the Personal Income Tax Law stipulates that some allowances such as regional allowances, attraction allowances, transfer allowances, etc. will not be included in taxable income, in order to support employees as well as encourage individuals to work in these areas. In addition, the Personal Income Tax Law also stipulates tax reduction for individuals facing difficulties due to natural disasters, fires, accidents or serious illnesses.

The draft Law proposes that the Government regulate family deduction levels to ensure flexibility and proactive adjustment to suit the reality and requirements of the country's socio -economic development in each period.

According to the current Personal Income Tax Law, individuals are entitled to deduct social insurance, health insurance, unemployment insurance, professional liability insurance for certain occupations that require compulsory insurance, minus family deductions, charitable and humanitarian contributions, allowances and subsidies as prescribed... the remaining amount is the income used as the basis for tax calculation.

In this latest draft, the Ministry of Finance proposes to add other specific deductions to income from salaries and wages before calculating taxes. Recently, there have been opinions that it is necessary to study and allow taxpayers to deduct some expenses during the year at an appropriate level, such as medical and educational expenses before calculating taxes.

Regarding this content, the drafting agency also proposed that the Government provide detailed regulations to ensure flexibility and suitability with the socio-economic situation. "The scope of deductible expenses and the level of deduction must be considered and calculated appropriately to achieve the set goals but also not reduce the role of personal income tax policy as a tool to regulate income and redistribute income in the economy," the Ministry of Finance emphasized.

The Ministry of Finance submitted to the Government and the National Assembly the draft Law on Personal Income Tax (amended) at the 10th session of the 15th National Assembly (October 2025). The law is expected to take effect from July 1, 2026.

Currently, the family deduction is 11 million VND and each dependent is 4.4 million VND per month. This level has been maintained since July 2020. Individuals are deducted from insurance, family deductions, allowances, subsidies... the remaining amount is the income subject to personal income tax.

Ngoc Vy

Source: https://vtcnews.vn/bo-tai-chinh-giam-tru-gia-canh-khong-phan-biet-thu-nhap-noi-song-ar963835.html