In Vietnam, from July 1, 2026, raises to civil servants' base pay and pensions, along with a revision of the income tax law, all began moving together (reported July 1, 2026). Local media reported that 29 laws and regulations took effect the same day, but for Japanese people working and living locally, the three that affect take-home pay and everyday life are the expanded income tax deductions, the simplified tax rates, the revision of civil servants' base pay, and the 8% pension increase. This article lays out the substance of the systems and how to approach them in practice, framed around "how it affects residents" rather than a straight copy of the circulars.
What happened on July 1
As of July 1, 2026, systems spanning wages, taxes, and pensions switched over almost simultaneously. The pillars are the enforcement of the revised personal income tax law, the raise to civil servants' base pay (mức lương cơ sở), and the boost to pensions and social insurance benefits. Personal income tax in particular is not unrelated to expatriates and locally hired Japanese, since even foreigners are taxed on salary income earned within Vietnam. On the other hand, the often-mentioned raise to region-based minimum wages was not this July but was already enforced earlier on January 1, 2026—a point worth noting since the timing differs.
Income tax: the basic deduction rises, and the rate brackets go from seven to five
The centerpiece of the revision is the raise to family deductions (giảm trừ gia cảnh). The basic deduction for oneself rises from 11 million dong per month to 15.5 million dong, and the deduction per dependent expands from 4.4 million dong per month to 6.2 million dong. As a result, no income tax applies up to a monthly income of 17 million dong for someone with no dependents, 24 million dong with one dependent, and 31 million dong with two dependents.
Alongside this, the progressive rate brackets were simplified from seven to five, and the income line at which the top 35% rate applies was raised to over 100 million dong a month. Fewer brackets in itself does not mean a direct increase or decrease in tax, but combined with the expanded deduction, it changes the sense of burden for middle- to high-income earners. Note that while the law's official effective date is July 1, the provisions on salary, wages, and business income are applied retroactively to January 1, 2026, and the new deduction amounts are said to be usable from the 2026 tax return. Mistaking "when it takes effect" partway through the year causes confusion at settlement, so it is safer to understand the timeline separately.
Civil servants' base pay and pensions: an 8% increase
Civil servants' base salary was raised from 2.34 million dong to 2.53 million dong, roughly 8%. This base salary is widely used in Vietnam's system as the basis for "coefficient × base salary" calculations, and it also ripples into things like caps on part of social insurance contributions. Pensions and social insurance benefits were also raised uniformly by 8% from the June level, with a 300,000-dong-per-month top-up for those receiving 3.5 million dong or less a month, and the 3.5 to 3.8 million dong bracket lifted up to 3.8 million dong. It is a design that is more generous the lower the pension.
There are few situations where Japanese residents directly receive a civil servant pension, but when base pay rises, the calculation base for social insurance and the like moves, so those involved in payroll at a local subsidiary need to recheck their company's deduction amounts and premiums. Confirming early with HR and accounting "which line on my pay slip changes" will spare you from being caught off guard by gaps in payment amounts from July onward.
The main revisions in numbers
| Item | Before revision | After revision (from July 2026) |
|---|---|---|
| Personal basic deduction (monthly) | 11 million dong | 15.5 million dong |
| Deduction per dependent (monthly) | 4.4 million dong | 6.2 million dong |
| Income tax rate brackets | Seven stages | Five levels |
| Civil servants' base pay (monthly) | 2.34 million dong | 2.53 million dong |
| Pensions and social insurance benefits | ― | Uniform 8% increase |
Practical points for residents and business travelers
The first thing salaried workers should check is the application of dependent deductions. Since the deduction has increased, the difference in take-home pay widens depending on whether you have properly registered your dependents. Spouses, children, dependent parents, and others may qualify, so it is worth checking with your company's accounting whether any registration has been missed. Next is the timing of the 2026 year-end adjustment and tax return. Because the new deduction on employment income applies retroactively to January 1, 2026, if too much was withheld in the first half of the year, you may get it back at settlement.
As for daily life such as prices and transport,The move to make 134 of Ho Chi Minh City's bus routes free from Julychanges that directly affect household budgets are also advancing in the same period. Since both the tax system and living costs move in the same summer, reviewing take-home pay and fixed costs as a set makes the changes easier to grasp. On the immigration front,The operation reviving health declarations from Julyhas also begun, adding items to prepare in advance each time you travel or return to your post.
The background to the revisions and the outlook ahead
This series of revisions is part of a trend to bring deductions and pay standards closer to reality in line with rising wages and prices. Because the basic income tax deduction had long been left unchanged, there had been continued criticism that deductions were not keeping up with rising living costs. Raising deductions and simplifying tax brackets can be read as aiming to support the disposable income of the middle class. Combined with the region-based minimum wage rising 7.2% in January and base pay and pensions moving 8% in July, 2026 became a year in which system-side boosts advanced in a concentrated way.
For Japanese people working locally, the changes are mainly in the direction of higher take-home pay, but not missing out on the benefits depends on the accuracy of dependent registration and filing. The system is expected to keep being adjusted in line with wages and prices, so it is reassuring to build the habit of taking stock of your pay slip and the contents of your deductions once a year.
Frequently asked questions
Q. Are foreigners also subject to Vietnam's income tax revision?
A. Employment income earned within Vietnam is subject to personal income tax, whether you are a resident or non-resident. If you are a resident, the raised family deductions also apply, so your take-home pay changes depending on your dependent registration status. To be sure which category you fall into, check with your company's accounting or tax staff.
Q. From which month's salary are the new deductions reflected?
A. The revised law officially takes effect on July 1, 2026, but the provisions on salary, wages, and business income are applied retroactively to January 1, 2026, and the new deduction amounts are said to be usable from the 2026 tax return. If too much was withheld in the first half of the year, it may be adjusted at settlement.
Q. Did the minimum wage also rise in July?
A. The roughly 7.2% increase in the regional minimum wage took effect earlier, on January 1, 2026, not in July. What moved on July 1 was the 8% raise to civil servants' base salary and pensions, plus the enforcement of the income tax law, so note that the timing is split.
Sources
VnExpress: Những chính sách nổi bật có hiệu lực từ tháng 7
Vietnam Briefing: Vietnam Amends Personal Income Tax Law
Vietnam+: Base salary set to rise to 2.53 million VND from July 1
Vietnam Briefing: Vietnam’s Regional Minimum Wage Effective from January 1, 2026
