Key Changes Introduced by Decree No. 253/2026/ND-CP and Circular No. 87/2026/TT-BTC Providing Detailed Guidance on the Implementation of Certain Provisions of the Personal Income Tax Law (Effective from July 1, 2026)

The Government has issued Decree No. 253/2026/ND-CP dated June 30, 2026. On the same day, the Ministry of Finance also issued Circular No. 87/2026/TT-BTC, providing detailed guidance on the implementation of certain provisions of the Personal Income Tax Law.

Both Decree No. 253/2026/ND-CP and Circular No. 87/2026/TT-BTC took effect on July 1, 2026. Notable changes include the following:

1. Meal Allowance

The non-taxable threshold for meal allowances (including lunch and mid-shift meals) has been increased to VND 1.2 million per employee per month, representing an increase of approximately 1.64 times compared to the previous limit of VND 730,000.

2. Housing Benefits Provided by Employers

Where employees receive housing provided by an employer in accommodation constructed by the employer for its employees, the housing benefit will not be included in the employee’s taxable income for personal income tax purposes. This exemption also covers electricity, water, and related utility services, if any.

Previously, this tax exemption only applied to employer-provided housing located in industrial parks, economic zones, areas with difficult socio-economic conditions, or areas with exceptionally difficult socio-economic conditions.

3. Severance and Job Loss Allowances

Where an organization or enterprise specifies in its financial regulations, internal policies, employment contracts, or collective labor agreements that severance or job loss allowances are payable at levels higher than the statutory minimum, the amount actually paid in excess of the statutory level will also be exempt from personal income tax.

Previously, only severance and job loss allowances paid in accordance with the Labor Code and the Law on Social Insurance were exempt from personal income tax, while any excess amount remained taxable.

4. Voluntary Pension Contributions

The maximum deductible contribution to a voluntary pension fund has been increased to VND 3 million per month, which is three times higher than the previous limit of VND 1 million per month.

5. Other Taxable Income

The regulations have been expanded to include additional categories of taxable income, such as income derived from:

• Transfers of Vietnam’s national “.vn” domain names;
• Transfers of greenhouse gas emission reduction results;
• Transfers of carbon credits;
• Transfers of auctioned vehicle license plates; and
• Transfers of digital assets, including virtual assets, crypto assets, and other digital assets.

6. Higher Threshold for Withholding Tax on Casual Income

The 10% withholding tax on casual income will now apply only where the payment is VND 5 million or more per payment, an increase of 2.5 times from the previous threshold of VND 2 million per payment.

7. Deductions for Medical and Education Expenses

Taxpayers may claim deductions for the following expenses:

• Medical expenses incurred at domestic healthcare facilities for services covered under the national health insurance benefits package, up to VND 23 million per year; and
• Education and training expenses incurred at domestic educational institutions, up to VND 24 million per year.

8. Overtime and Night Shift Income

Income earned from night work and overtime in accordance with labor laws is fully exempt from personal income tax.

Previously, only the additional amount paid above the regular hourly wage for overtime or night work was exempt.

9. Higher Income Threshold for Dependents

The monthly income threshold used to determine whether an individual qualifies as a dependent for family circumstance deductions has been increased from VND 1 million to VND 3 million per month.