“It may sound like a raise, but the amount I actually take home barely changes,” the 35-year-old Hanoi tech engineer says. “I no longer feel motivated to push harder.”
Even before the raise he was taking home more than VND80 million a month after tax. Under the law, personal income above that threshold is taxed at the highest rate of 35%.
“My wife told me I should just stop working overtime and use the extra time to take the kids for a walk,” he says.
For the past six years Bao Ngoc, 45, a senior marketing executive who used to work for two major corporations, has kept her income hovering below the top tax bracket.
“I take on fewer projects and keep my annual income within the 30% tax bracket,” she says, pointing out it also enables her to preserve her personal time.
“If I make an extra VND10 million and lose VND3.5 million to tax, is it really worth the stress?”
The tax law has seven brackets, with the top 35% rate unchanged since 2009 for the VND80 million threshold. They both believe that the current rate is outdated and discourages productivity.
“The principle of higher income leading to higher tax is fair,” Nguyen Ngoc Tu, a former director of the General Department of Taxation, said. “But keeping the thresholds unchanged for 16 years while prices and salaries have changed a great deal creates public discontent.”
Vietnam’s PIT faced three main issues.
First, unlike corporate income tax, which had been cut five times from 32% to 20% and would drop to 15–17% for small and medium enterprises from Oct. 1 this year, the top PIT rate remained set in stone.
In 2024 the government’s revenues exceeded VND2 quadrillion for the first time.
Salaried employees paid VND189 trillion, or 9.3% of the total, while 5.2 million household businesses — small family-run entities — contributed less than VND26 trillion, or 1.8%. Second, while many developed nations had PIT rates of 35–45%, their per capita GDP ranged from $34,000 to $80,000, and governments provided extensive welfare, including healthcare, education and housing support. Vietnam’s per capita income was far lower.
Third, inflation and rising living costs, especially for essential goods and housing, had made current brackets outdated. In Hanoi and HCMC, many salaried workers struggled to buy homes, sometimes more than their counterparts in Singapore, where per capita GDP exceeded $90,000 and the top PIT rate was 22%. “It is contradictory for Vietnam to impose such high PIT when its average GDP per capita is only about a 10th of that of developed nations.”
Sustained high tax rates eroded not only earnings but also workers’ motivation. Ngoc’s career shows how tax policies can influence work decisions. One of her former employers was known in the industry for pushing staff to their limits, and colleagues joked her office sofa could have been her bed.
For years she moved from one project to another, often leaving the office at 11 p.m. and working at home until 2 or 3 a.m. “I was burning myself out,” she says. Although the job put her in the highest tax bracket with a desirable salary, her mental health began to suffer.
In 2019, while on her way to a client meeting, she heard a childhood folk song in a taxi. Memories flooded back, and she cried for 20 minutes. “That was the moment I knew I had to stop,” she says. She now freelances, working about 10 days a month and keeping her annual income under VND1.2 billion to limit heavy tax deductions.
She also spends far more frugally than before. Her experience reflects a wider trend: when tax burdens are high, workers often cut back on both labor and spending, reducing overall consumption, a key driver of economic growth.
The Ministry of Finance is reviewing the PIT system for the next five years, considering two changes: reducing the number of brackets and widening income ranges within them. But it has indicated the highest rate would remain at 35%.
Tu and other experts call for lowering the top rate to 20–25% and raising the family-related standard deduction threshold to better reflect the cost of supporting dependents. They say such changes will encourage legal income growth, savings and investment.
International examples offer cautionary lessons. In the U.K., high tax rates have led to the rise of “High Earners, Not Rich Yet” (HENRYs), people earning over £100,000 (US$134,490) who see little benefit due to taxes and reduced welfare.
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Thai Dao, a senior executive at a U.S. textile group in Vietnam, during his trip in the U.S. in June 2025. Photo courtesy of Thai Dao |
In 2022 more than 10,000 employees capped their incomes at just below the next higher tax threshold.
A report by the U.K.’s The Economist magazine found that some doctors reduced working hours to avoid higher taxes, leading to longer patient wait times.
In Vietnam, tax evasion is not unusual, according to lawyer Nguyen Van Duoc, head of the policy committee at the Ho Chi Minh City Tax Consultancy and Agency Association.
He also supports lowering the top rate to 30% or less.
“Reducing taxes does not necessarily reduce government revenue. When production, consumption, investment, and talent thrive, tax revenue becomes more sustainable.
“Vietnam might even attract international taxpayers and reduce the outflow of Vietnamese income abroad.”
Thai Dao, 48, a senior executive at a U.S. textile group in Vietnam, has paid over VND80 million in PIT every month for years, totaling more than VND1 billion annually. The amount could buy a small apartment in the suburbs, yet he never considered working less. “To me, it is a civic duty,” he says, “but sometimes it does feel unfair when the public benefits do not reflect what we contribute.”
His view shifted earlier this year after learning about government plans to waive tuition fees for all public school students, provide subsidies for private school students, support meals for semi-boarding students, and reduce hospital charges.
He says the amount of tax he has been paying for 16 years no longer feels like just numbers on a form, but is now visible in a meal, a classroom or a hospital bed for the vulnerable. “Even if I do not benefit fully from what I put in, I am glad I can give back.”
