I. Legal basis

• Decree No. 73/2024/ND-CP
• Social Insurance Law 2024
• Decree No. 293/2025/ND-CP
• Employment Law 2025
• Personal Income Tax Law 2025

II. Key salary policies effective from January 1, 2026

1. Regional minimum wages will increase by approximately 7.2% (VND 250,000–350,000)

Government Decree No. 293 stipulates the minimum wages for employees working under labor contracts, effective from January 1, 2026, replacing Decree No. 74/2024. Accordingly, regional minimum wages will increase by VND 250,000–350,000 per month, averaging approximately 7.2%.

The application of regional minimum wages shall be based on the location of the employer’s operations. Enterprises operating in a given locality shall apply the corresponding regional minimum wage. In the case of enterprises having branches in multiple localities with different wage levels, each branch shall apply the minimum wage of the region where its head office is located.

For industrial parks, export processing zones, high-tech zones, or concentrated digital technology zones located in localities with different wage levels, the highest minimum wage shall be applied. In cases where a locality undergoes a name change, division, or is newly established, the previous regional minimum wage shall be temporarily applied until new regulations are issued by the Government.

2. “Reference salary” – the new basis for social insurance contributions and benefits

As from 1 July, upon the entry into force of the 2024 Law on Social Insurance, the “reference level” becomes the new benchmark replacing the “base salary” within the social security system for the purpose of calculating compulsory social insurance contributions.

From the January 2026 payroll period, this regulation will be implemented in practice, resulting in a dual impact on employees’ income.

With respect to social insurance contributions, the reference level establishes both the floor and the ceiling: the salary used as the basis for contribution must not be lower than the reference level (currently VND 2.34 million per month on a provisional basis) and must not exceed twenty (20) times such level.

With respect to benefit entitlements, sickness, maternity, survivorship, funeral and other regimes are all calculated based on the reference level, thereby enhancing the value of support available to employees when needed. As the reference level will be flexibly adjusted in line with economic fluctuations and the consumer price index, benefit payments are preserved in real terms; however, this also means that social insurance contribution amounts may increase more frequently. Accordingly, enterprises and employees should proactively monitor such adjustments in order to make timely revisions.

3. The personal deduction for taxpayers is increased by an additional VND 4.5 million, under which individuals with a monthly income of VND 17 million are not subject to personal income tax

Pursuant to the amended Law on Personal Income Tax, as from 1 January 2026, the progressive tax schedule shall be reduced from seven (7) brackets to five (5) brackets, while the highest marginal tax rate remains at thirty-five percent (35%). The lowest tax rate of five percent (5%) shall apply to monthly taxable income of up to VND 10 million, and the thirty-five percent (35%) rate shall apply to monthly taxable income exceeding VND 100 million, instead of applying to income exceeding VND 80 million as currently in effect.

Effective from January 1, 2026, enterprises shall provisionally calculate and withhold personal income tax on a monthly or quarterly basis in accordance with the new tax rates. Taxpayers shall carry out final tax settlement to determine the personal income tax payable for tax year 2026 during the period from January 1, 2027 to March 31, 2027.

With respect to family circumstance deductions, pursuant to the Resolution of the Standing Committee of the National Assembly, the deduction for the taxpayer himself/herself is increased to VND 15.5 million per month, representing an increase of VND 4.5 million; and the deduction for each dependent is increased to VND 6.2 million per month, representing an increase of VND 2.2 million. These deduction levels shall be applicable from the 2026 tax period. Under the new regulations, a taxpayer without dependents earning an income of approximately VND 17 million per month, after deducting compulsory insurance contributions and family circumstance deductions, shall not be subject to personal income tax.

4. New Regulations on Unemployment Insurance

The 2025 Law on Employment, which takes effect on January 1, 2026, introduces numerous significant amendments and supplements concerning the rights and interests of enterprises and employees.

Accordingly, employees shall contribute up to 1% of their monthly salary to unemployment insurance; employers shall contribute up to 1% of the monthly payroll fund of employees participating in unemployment insurance; and the State shall provide support of up to 1% of the monthly payroll fund for unemployment insurance contributions.

The 2025 Law on Employment provides that the monthly unemployment allowance shall be equal to 60% of the average monthly salary on which unemployment insurance contributions were paid for the six (6) most recent months preceding the termination of the labor contract, working contract, or cessation of employment. The maximum unemployment allowance shall not exceed five (5) times the regional monthly minimum wage as announced by the Government and applicable in the final month of unemployment insurance contribution.

Accordingly, under the new law, the maximum level of unemployment allowance no longer distinguishes between employees whose salary regimes are prescribed by the State and employees in the non-state sector, as provided under the current regulations. A uniform maximum benefit level shall be applied to all employees.

5. Household businesses with annual revenue exceeding VND 500 million shall be subject to tax obligations

Pursuant to the Law on Personal Income Tax, effective from January 1, 2026, household businesses with annual revenue of VND 500 million or more shall fall within the scope of tax liability. This threshold concurrently serves as the revenue level eligible for exemption from value-added tax and personal income tax upon the discontinuation of the lump-sum taxation method and the transition to the self-declaration and tax payment regime. Compared with the current regulations, the taxable revenue threshold has been increased from VND 100 million to VND 500 million per year, representing a fivefold increase.

The Law also introduces a profit-based tax calculation method applicable to household businesses, which is determined on the basis of the difference between revenue and expenses. Accordingly, household businesses with annual revenue of less than VND 3 billion, where input costs can be determined, shall be subject to a tax rate of 15% on the profit portion. This rate is equivalent to the corporate income tax incentive rate applicable to micro-enterprises with comparable revenue levels.

Household businesses with annual revenue ranging from VND 3 billion to VND 50 billion shall be subject to a tax rate of 17%. In cases where annual revenue exceeds VND 50 billion, a tax rate of 20% shall apply.

For individuals and household businesses that are unable to determine their expenses, tax shall continue to be assessed based on a percentage of revenue, as currently applied, at rates ranging from 0.5% to 2% depending on the business sector. However, taxpayers are entitled to deduct the portion of revenue falling within the non-taxable threshold prior to tax calculation, meaning that tax is not imposed on the entire revenue from the first monetary unit earned.

III. Conclusion

From January 1, 2026, the system of wage policies and income-related regimes applicable to employees, as well as the obligations of employers and household businesses, shall undergo comprehensive, synchronized, and structural adjustments, based on newly promulgated laws and decrees.

The increase in the regional minimum wage, the establishment of a “reference level” serving as the basis for social insurance contributions and benefits, the revision of the personal income tax brackets and family circumstance deductions, together with new regulations on unemployment insurance and the tax obligations of household businesses, have directly impacted labor costs, actual income, and the legal responsibilities of the parties involved in labor and business relationships.

In this context, employers are required to promptly review and adjust their salary scales and payrolls, labor contracts, internal wage regulations, as well as their insurance and tax obligations, in order to ensure full compliance with applicable laws and regulations, and to mitigate legal risks and potential disputes. Employees and household businesses should also proactively familiarize themselves with the new policies so as to safeguard their lawful rights and interests and to fully discharge their obligations to the State.

A proper understanding and consistent application of the foregoing regulations is not only a matter of legal compliance, but also constitutes an important foundation for stabilizing labor relations, ensuring social security, and promoting sustainable economic development in the new phase.

IV. About Us, Hankuk Law Firm

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