Personal deductions are a crucial factor in determining taxable personal income, helping to reduce tax obligations in a reasonable and legal manner. This article provides comprehensive information on the concept, calculation methods, required documents, conditions, and common mistakes to avoid when applying personal deductions in year-end tax settlements.
What is personal allowance? Legal basis and significance.
Personal allowances are deductions from taxable income when calculating personal income tax. This applies to the taxpayer themselves and those they are obligated to support (dependents).
Legal basis:
- Personal Income Tax Law 2007 (Revised and supplemented in 2012)
- Circular 111/2013/TT-BTC
- Resolution 954/2020/UBTVQH14 on adjusting the personal allowance deduction.
Personal deductions help to more accurately determine an individual's actual tax-paying capacity, ensuring fairness in the application of tax policies.
The latest personal allowance rates for 2025.
As of July 2025, the personal allowance deduction is still being applied according to Resolution 954/2020/UBTVQH14:
- Taxpayer: 11 million VND/month (132 million VND/year)
- Dependent allowance: 4.4 million VND/month/person
In 2025, there are no official proposals or documents regarding changes to the personal allowance deduction. However, given the inflationary environment and proposals from some representatives, taxpayers should closely monitor information from the Ministry of Finance and the General Department of Taxation.
How to calculate personal allowances according to current regulations.
Formula for calculating taxable income:
Taxable income = Total income – Personal deductions – Dependent deductions – Other deductions (insurance, gifts, etc.)
For example:
- Mr. Nam earns 20 million VND per month and has two young children to support.
- Deduction calculation: 11 + 4.4 x 2 = 19.8 million VND
- Taxable income: 20 – 19.8 = 0.2 million VND (not yet at the tax threshold)
Note: Tax deductions can be calculated monthly or annually, but must be registered and recorded by the tax authorities.
Conditions for personal allowance deduction
To be eligible for personal deductions, taxpayers need to meet certain basic conditions, which are divided into two groups: deductions for themselves and deductions for dependents.
For me personally, the most important condition is that the taxpayer must have a personal tax identification number and be generating taxable income from salaries, wages, business activities, or other sources of income subject to personal income tax. Having a tax identification number is not only a technical requirement but also serves as a basis for the tax authorities to identify eligible taxpayers and monitor tax declarations in accordance with regulations.
For dependents, the eligibility criteria are somewhat stricter. First, the relationship between the taxpayer and the dependent must be clearly proven through a household registration book or other legal documents demonstrating the obligation to provide support. At the same time, the dependent must have no income or an income not exceeding 1 million VND per month. Importantly, a dependent can only be counted for one taxpayer in the same year, even if there are multiple people providing support (e.g., elderly parents, young children...).
The deduction begins to be applied from the month the child support obligation arises, provided that the registration form has been completed and accepted by the tax authority. If registration is delayed, the taxpayer must provide sufficient evidence to reclaim the deduction from the valid date.
Dependent registration form for tax deduction
First-time registration:
- Form 20-DK-TH-TCT
- Birth certificate, ID card, household registration book, income declaration form for dependents (if any)
- Register directly at the tax office or through the portal. https://thuedientu.gdt.gov.vn
When updating/stopping calculations:
- Change of declaration form
- Explanation of the change in status
- If registering late, sufficient documentation must be provided to trace the impact from the beginning of the year.
At what age are parents eligible for personal allowance deductions?
Age isn't a deciding factor. As long as the parents:
- No pension or income subject to taxation.
- Identified as a valid dependent
However, further reference is needed. Decree 135/2020/ND-CP Regarding retirement age:
- In 2025: men will be 60 years and 3 months old, women will be 55 years and 4 months old.
How to determine the period for calculating dependent deductions.
Determining when the dependent allowance deduction begins to apply not only affects the amount of tax payable but also determines the taxpayer's rights in each tax period.
According to current regulations, if a taxpayer completes the registration of dependents before December 31st of the year in which the obligation to support arises, the deduction will be calculated from the first month of the obligation to support. This mechanism aims to ensure full benefits for taxpayers, provided that the application is valid and received by the tax authorities within the deadline.
In cases where dependents are registered after December 31st, the deduction period will begin from the filing month. This means taxpayers cannot reclaim deductions for previous months unless they provide complete supporting documentation and receive written approval from the tax authorities.
For situations arising late or with errors in declarations, taxpayers can still supplement their documents during the year-end tax settlement period. If the documents provide sufficient legal basis (such as birth certificates, certificates of parental responsibility, income documents, etc.), the tax authorities may allow the recovery of tax deductions from the first eligible month.
Common mistakes when registering for personal income tax deductions.
Registering for family allowance deductions may seem simple, but in reality, many taxpayers encounter problems due to minor errors in their paperwork or declaration process. One of the most common mistakes is declaring the same dependent for the same spouse, especially when both work for different companies. According to regulations, a dependent can only be claimed as a deduction for one taxpayer in the same year, so a lack of agreement from the start can easily lead to errors during tax settlement.
Furthermore, many taxpayers fail to update information when dependents' status changes—for example, when children reach working age and earn an income, or when parents begin receiving pensions. Failure to make timely adjustments can lead to incorrect deduction calculations, resulting in tax arrears and even penalties if deemed to be intentional misdeclaration.
Another common mistake is failing to maintain complete supporting documentation when tax authorities conduct an audit. Many people only submit copies, neglecting to keep the originals or providing valid documentation proving their child support obligations. This makes verification difficult and disadvantages the taxpayer.
Finally, some individuals, despite registering late, still wish to have their deductions retroactively credited from the beginning of the year. Failure to submit complete and valid supporting documents.. If there is no clear basis for determining when the obligation to support arose, the tax authorities will refuse to grant recovery and will only calculate it from the month of declaration.
Conclusion and recommendations
Personal allowances are a humane tax policy aimed at adjusting individuals' tax obligations based on their actual income circumstances and responsibilities in supporting family members. This allowance not only helps reduce the amount of tax payable but also accurately reflects the taxpayer's financial capacity, thereby ensuring fairness in the application of personal income tax law.
However, to fully benefit from these advantages, individuals need to understand the applicable conditions, prepare complete documentation, and register within the deadline as instructed by the tax authorities. Delays, incorrect declarations, or lack of legal basis may result in tax arrears or loss of tax deductions for the entire year.
During the tax filing or settlement process, if you need assistance reviewing documents, registering dependents, or determining the correct time to claim deductions, please contact our team of specialists. Master Accountant Network (MAN). We are ready to work with you to ensure that your declarations are legally correct, that your rights are protected, and that you avoid unnecessary risks.
Contact information for Master Accountant Network – MAN
- Address: 19A, 43rd Street, Tan Thuan Ward, Ho Chi Minh City
- Mobile / Zalo: 0903 963 163 – 0903 428 622
- E-mail: man@man.net.vn
Interested readers can find out more about full-service accounting or Personal income tax settlement services to receive advice and support tailored to your needs.
Source: This article references legal information from LuatVietnam.vn – What is personal deduction?
