Vietnam Expands Tax Deductions for Education and Healthcare Expenses

Vietnam is set to enhance personal income tax (PIT) deductions, allowing taxpayers to claim relief for education and healthcare expenses. Effective from July 1, 2024, this reform introduces new allowances, enabling individuals to deduct up to VND 47 million (approximately $1,850) annually. The new regulations permit a maximum deduction of VND 23 million for healthcare costs and VND 24 million for education expenses per year. These are in addition to existing deductions such as those for dependents, mandatory insurance contributions, and charitable donations. To qualify for these deductions, taxpayers must possess valid invoices and certificates detailing the expenses incurred by themselves or their dependents. Costs already covered by the state budget, social insurance, or other insurance schemes are not eligible. All tuition fees from kindergarten to university, including vocational and professional training courses, are eligible for the education deduction, provided valid receipts are available. However, ancillary fees like boarding, transportation, uniforms, textbooks, and extracurricular activities are excluded. For medical expenses, a detailed statement of examination and treatment costs, in a format prescribed by the Ministry of Health, is required. This tax adjustment aligns with broader changes to Vietnam's progressive tax system. From January 1, 2026, the basic personal deduction will be raised to VND 15.5 million per month (VND 186 million annually), with an additional VND 6.2 million per month for each dependent. The number of tax brackets for salary and wage income will also be reduced from seven to five, with adjustments to the income thresholds for each bracket. These changes are expected to reduce the tax burden on low and middle-income earners. Tax authorities are advising taxpayers to maintain all supporting documents for verification and tax settlement. This policy is part of the government's efforts to support citizens and foster economic growth within the country's socialist-oriented market economy. Source: VnExpress