2026 UPDATE: Which Allowances Are Exempt from PIT and Not Subject to Social Insurance Contributions?
According to current regulations, certain allowances, benefits, and types of income of employees are not subject to Personal Income Tax (PIT). Specifically:
Items Not Subject to PIT from Salaries and Wages
Pursuant to Point c, Clause 2, Article 3 and Article 4 of the 2025 Law on Personal Income Tax, the following allowances, benefits, and income are exempt from or not included in taxable income from salaries and wages:
- Allowances and benefits provided under preferential policies for people with meritorious services to the country; defense and security allowances in accordance with the law.
- Hazardous and dangerous working-condition allowances applicable to occupations, industries, and jobs performed at workplaces involving hazardous or dangerous factors.
- Attraction allowances and regional allowances in accordance with regulations.
- Allowances, benefits, and living expenses paid by Vietnamese agencies abroad.
- Social insurance-related benefits, including: emergency hardship allowances; occupational accident and occupational disease benefits; lump-sum benefits upon childbirth or adoption; benefits for reduced working capacity; lump-sum retirement benefits; monthly survivorship benefits; and other benefits prescribed by social insurance laws.
- Severance allowances and redundancy allowances in accordance with regulations.
- Social welfare allowances.
- Other allowances, benefits, and income that are not in the nature of salaries or wages as prescribed by the Government.
- Night-shift wages, overtime pay, and salaries or wages paid for days on which employees do not take leave in accordance with the law.
- Salary and wage income of Vietnamese seafarers working for foreign shipping companies or Vietnamese shipping companies engaged in international transportation.
- Income of individuals who are ship owners, persons having the right to use ships, and persons working on ships, arising from the provision of goods and services directly serving offshore fishing activities.
- Salary and wage income arising from the performance of duties related to science, technology, and innovation.
- Salary and wage income of certain specific categories of individuals, including:
- Foreign experts working on programs or projects funded by non-refundable ODA;
- Foreign experts working on programs or projects funded by foreign non-governmental organizations in Vietnam;
- Vietnamese individuals working for representative offices of international organizations within the United Nations System in Vietnam;
- Individuals participating in United Nations peacekeeping forces.
- Income of individuals who are owners of private enterprises or owners of single-member limited liability companies after the enterprise has fulfilled its Corporate Income Tax (CIT) obligations.
Note
The fact that an allowance or benefit is not subject to PIT does not automatically mean that it is also exempt from Social Insurance (SI) contributions. PIT and SI contributions are governed by different legal regulations. Therefore, each type of income and each specific case must be assessed separately to determine the applicable treatment.
Cases Eligible for Time-Limited Personal Income Tax Exemption or Reduction on Salaries and Wages
Pursuant to Article 5 of the 2025 Law on Personal Income Tax, certain income from salaries and wages is subject to tax exemption or reduction policies for a specified period, specifically:
1. Tax reduction in cases of special circumstances
Taxpayers who suffer damage or face difficulties due to natural disasters, epidemics, fires, accidents, or serious illnesses, resulting in an impact on their ability to fulfill their tax obligations, may be considered for a reduction of the tax payable corresponding to the extent of the damage. The tax reduction must not exceed the amount of tax payable by the taxpayer.
2. Five-year tax exemption for high-quality digital technology industry personnel
Income from salaries and wages earned by high-quality digital technology industry personnel is exempt from PIT for a period of 05 years, if they fall into one of the following groups of activities:
- Working on projects for the development and operation of the digital technology industry in concentrated digital technology zones;
- Participating in projects involving the research, development, and manufacture of key digital technology products, semiconductor chips, or artificial intelligence systems;
- Participating in activities involving the training and development of human resources for the digital technology industry.
3. Five-year tax exemption for high-tech personnel
Individuals who are high-tech personnel engaged in research and development of high technologies or strategic technologies included in the list of technologies prioritized for investment and development in accordance with the law shall be exempt from PIT on income from salaries and wages for a period of 05 years.
This policy also applies to activities related to strategic technologies and strategic technology products included in the lists prescribed by the law on high technology.
Payments Not Subject to Compulsory Social Insurance Contributions
Pursuant to Clause 1, Article 7 of Decree No. 158/2025/ND-CP and the guidance under Official Letter No. 1198/CTL&BHXH-BHXH 2025, the salary used as the basis for compulsory social insurance contributions includes the salary, salary allowances, and other additional amounts that are specifically determined and paid regularly and stably under the labor contract.
Accordingly, compulsory social insurance contributions do not apply to allowances and additional payments that depend on or fluctuate according to the employee’s productivity, working process, and quality of work.
In addition, benefits and welfare payments specified as separate items in the labor contract are also not included in the salary used as the basis for social insurance contributions, including:
- Bonuses based on production and business results or the level of work performance;
- Innovation and initiative bonuses;
- Meal allowances;
- Support for fuel, telephone, transportation, and housing expenses;
- Childcare and child-rearing support;
- Support provided when the employee’s relative passes away, when a relative gets married, or on the employee’s birthday;
- Allowances for employees facing difficult circumstances due to occupational accidents or occupational diseases;
- Other support and allowances specified as separate items in the labor contract.
Note
Determining whether a particular payment is subject to compulsory social insurance contributions must be based on the nature of the payment, the agreement between the parties, and how the payment is specified in the labor contract, rather than solely on the name given to the allowance or support.
