The method for calculating personal income tax for salaried individuals and self-employed individuals is clearly stipulated in the Personal Income Tax Law of 2007, amended and supplemented in 2012; the Law amending certain articles of the Laws on taxation of 2014; and current guiding documents for the Personal Income Tax Law.
How to calculate personal income tax for salaried individuals.
Personal income tax for salaried individuals is calculated based on taxable income and a progressive tax rate system.
According to current regulations, there are two types of income from salaries and wages that are subject to tax: incidental income (employees with contracts of less than two months and seasonal contracts, commissions, discounts, etc.); and regular income (salaries, bonuses, allowances, etc., for employees with contracts of two months or more).
For incidental income, if the income exceeds 2 million VND or the total amount of payments in a month exceeds 2 million VND, the tax is deducted at a rate of 10%. Income below 2 million VND is not subject to deduction.
Personal income tax for salaried employees is calculated according to a progressive tax rate schedule based on taxable income (Photo: Tien Tuan).
According to current regulations, individuals with no dependents are required to pay income tax if their total income from salaries and wages exceeds 11 million VND per month (this income has already deducted mandatory insurance contributions, allowances, and other contributions such as charitable and humanitarian donations).
The personal allowance for individual income taxpayers is 11 million VND. Additionally, if there are dependents, the allowance for each dependent is 4.4 million VND per month.
According to current regulations, the progressive tax rate for salaried employees consists of 7 brackets, with tax rates ranging from 5% to 35%.
The progressive tax rates are determined as follows:
| Tax bracket | Taxable income per year (million VND) | Taxable income per month (million VND) | Tax rate (%) |
| 1 | Up to 60 | Up to 5 | 5 |
| 2 | Over 60 to 120 | Between 5 and 10 | 10 |
| 3 | Between 120 and 216 | Ages 10 to 18 | 15 |
| 4 | From 216 to 384 | Ages 18 to 32 | 20 |
| 5 | From 384 to 624 | Between 32 and 52 | 25 |
| 6 | Between 624 and 960 | Between 52 and 80 | 30 |
| 7 | Over 960 | Over 80 | 35 |
Therefore, the personal income tax payable by salaried employees is the total tax calculated according to each tax bracket.
Tax amount calculated for each income bracket = Taxable income of that bracket x Corresponding tax rate of that bracket
Example: Ms. Nguyen Thi A's monthly income from salary and wages in August 2024 was 30 million VND, with a monthly insurance contribution of 3.15 million VND (in the mandatory social insurance contribution structure, employees contribute 10.5% of their salary as the basis for social insurance). Ms. A is single, has not registered for family allowance deductions for dependents, and does not receive any allowances or subsidies that are exempt from deductions.
Ms. A's taxable income for personal income tax purposes is determined as follows:
- Taxable personal income is 30 million VND.
- Personal deductions according to current regulations amount to 11 million VND.
- The monthly insurance premium is 3.15 million VND.
Taxable income = Personal income tax - Family deductions - Monthly insurance contributions = 30 million VND - 11 million VND - 3.15 million VND = 15.85 million VND.
The amount of personal income tax payable = 5 million VND x 5% + 5 million VND x 10% + 5.85 million VND x 15% = 1.6275 million VND.
How to calculate personal income tax for self-employed individuals.
Individuals engaged in business activities pay personal income tax based on a percentage of their revenue, depending on their specific field or industry of production and business.
Revenue includes all proceeds from sales, processing fees, commissions, and service fees generated during the tax period from the production and business activities of goods and services. If an individual business cannot determine its revenue, the competent tax authority may determine it in accordance with the law on tax administration.
The tax rate is determined as follows:
| List of occupations | Tax rate (%) |
| The field of goods distribution and supply. | 0.5 |
| The service and construction sectors do not include the supply of materials. | 2 |
| Property leasing activities, insurance agency, lottery agency, multi-level marketing agency. | 5 |
| Production, transportation, services related to goods, and construction with material procurement included. | 1.5 |
| Other business activities | 1 |
Therefore, the personal income tax payable by an individual engaged in business = taxable personal income x personal income tax rate.
Individuals engaged in business activities whose revenue from production and business activities in a calendar year is less than 100 million VND are not required to pay personal income tax.
Example: Ms. Nguyen Thi B, who runs a shoe business, had taxable personal income of 30 million VND in August 2024. Her business falls under the category of goods distribution and supply, so the personal income tax rate is calculated at 0.5%.
The amount of personal income tax that Ms. Bich has to pay is calculated as follows:
Amount of personal income tax payable = Taxable personal income x Personal income tax rate = 30 million VND x 0.5% = 150,000 VND.
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Source: https://dantri.com.vn/kinh-doanh/thue-thu-nhap-cua-nguoi-lam-thue-va-nguoi-kinh-doanh-duoc-tinh-ra-sao-20240807152413631.htm
