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According to many current workers, the personal income tax (PIT) family deduction in Vietnam has become outdated, failing to keep up with inflation and rising living costs, thus placing financial pressure on taxpayers.
Currently, the deduction stands at VND 11 million per month (VND 132 million per year) for individuals and VND 4.4 million per month (VND 52.8 million per year) for each dependent, as stipulated in Resolution 954/2020/UBTVQH14. However, this amount is now insufficient to meet the actual cost of living.
Even those with higher incomes—earning tens of millions per month or hundreds of millions per year—struggle with rising living expenses while their real income is gradually eroded by taxes. The costs of raising children, caring for the elderly, and household expenses have increased significantly compared to previous years. Surveys indicate that the cost of maintaining a basic standard of living has risen 4-5 times since 2008, while the family deduction has increased by less than three times.
Not only high-income earners but also middle-income workers face considerable financial pressure. A VnExpress survey found that with an average monthly income of VND 22 million, workers spend around VND 10 million on personal expenses but need at least VND 7 million to support one dependent. Meanwhile, the current family deduction for dependents is only VND 4.4 million—far below actual needs.
Additionally, living costs in major cities such as Hanoi and Ho Chi Minh City have surged post-COVID-19. For instance, an office lunch that cost VND 30,000–40,000 in 2020 now costs VND 50,000–70,000. Public school tuition fees have also risen significantly, while private schools may charge VND 10–15 million per month. These increasing expenses place a growing financial burden on families, especially for workers with young children or elderly dependents.
Despite these challenges, the Ministry of Finance has not adjusted the family deduction because the Consumer Price Index (CPI) has not increased by 20% compared to 2020. However, many economists and legal experts argue that the deduction should be adjusted in line with inflation, as seen in other countries. Raising the family deduction would alleviate workers’ tax burdens, increase real income, and stimulate consumer spending.
According to the General Department of Taxation, PIT revenue in 2024 reached VND 189 trillion, exceeding the budget estimate by about VND 30 trillion. The growing number of taxpayers indicates that workers’ incomes are not being adequately protected, as the family deduction fails to offset inflation. Dr. Nguyen Ngoc Tu, former Director of the General Department of Taxation, asserts that the PIT Law is outdated, with the most obsolete aspect being the family deduction, which requires immediate revision.
The revision of the PIT Law is scheduled for discussion in 2025 and implementation in 2027, but many believe that increasing the family deduction should be enacted as early as this year. Doing so would not only ensure fairness for taxpayers but also contribute to overall economic growth.
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