Insights

How to Calculate Payroll in 2026 for Businesses: Gross to Net, Social Insurance, and Personal Income Tax

By Nguyễn Quốc Trung — Deputy General Director · Updated 2026-09-02

Calculating payroll in 2026 for a business follows a fixed chain: take the gross wage and allowances, determine the basis for insurance contributions, deduct the worker's 10.5% insurance share, deduct family-circumstance relief, apply the 5-bracket progressive personal income tax schedule, and arrive at the net wage. What makes 2026 different lies in four source figures: the new regional minimum wage under Nghị định 293/2025/NĐ-CP effective 01/01/2026 (Region I is 5,310,000 VND per month), the social insurance reference level of 2,530,000 VND per month effective 01/07/2026, the personal income tax schedule trimmed to 5 brackets under Luật Thuế TNCN số 109/2025/QH15, and family-circumstance relief raised to 15.5 million VND. Get any one of these four wrong and the entire payroll, social insurance return, and tax finalization drift with it.

What changes in payroll calculation in 2026?

The gross-to-net method for 2026 keeps the same formula framework, but five changes affect specific lines on the payroll directly:

• The regional minimum wage rises from 01/01/2026 under Nghị định 293/2025/NĐ-CP. This affects the lowest wage, the overtime hourly rate, and the unemployment-insurance contribution cap (20 times the regional minimum wage).
• The reference level of 2,530,000 VND per month from 01/07/2026 takes over the role of the base salary in the social insurance formula. The cap for social and health insurance contributions is 20 times the reference level, i.e. 50,600,000 VND per month under Nghị định 161/2026/NĐ-CP.
• The personal income tax schedule is cut from 7 brackets to 5 under Luật Thuế TNCN số 109/2025/QH15, applicable from the 2026 tax period, together with the new family-circumstance relief under Nghị quyết 110/2025/UBTVQH15.
• Luật BHXH số 41/2024/QH15 (effective 01/07/2025) and Nghị định 158/2025/NĐ-CP extend the mandatory scope to non-full-time workers who meet the conditions.
• Data is cross-checked: the wage cost on the financial statements, the social insurance return, and the total income on electronic withholding vouchers are matched by the tax authority. A misclassified allowance is no longer just a "bookkeeping slip" but a back-collection risk.

What is the 2026 regional minimum wage and from what date does it apply?

The regional minimum wage is the monthly wage floor below which a business may not pay a worker doing simple work under normal conditions, having worked the standard number of hours. The rates from 01/01/2026 under Nghị định 293/2025/NĐ-CP:

• Region I: 5,310,000 VND per month
• Region II: 4,730,000 VND per month
• Region III: 4,140,000 VND per month
• Region IV: 3,700,000 VND per month

Alongside the monthly figure there is an hourly minimum, converted from the monthly rate, used for workers paid by the hour such as part-timers, seasonal staff, and on-site collaborators. A business must also review its internal salary scale, because a higher grade 1 pulls up every grade above it if the scale is built on coefficients.

Which regional minimum wage applies to a multi-site business?

The applicable region is determined by where the worker actually works, not by where the business is registered. A head office in Region II with a workshop in Region I means workers at the workshop are paid at the Region I rate.

Three situations that often go wrong:

• A business with branches, warehouses, or points of sale in several localities runs a single minimum wage across the software.
• A locality that has just had its administrative units rearranged, changing the regional list, while the payroll has not been updated.
• Outsourced, seconded, or client-site workers — the region follows the actual place of work, not the employer on paper.

What is the social insurance reference level of 2,530,000 VND, and how does it differ from the base salary?

The reference level is the figure that replaces the role of the "base salary" throughout the social insurance formula from Luật BHXH số 41/2024/QH15. From 01/07/2026, the reference level is 2,530,000 VND per month. The core difference: the base salary was previously tied to the public sector, whereas the reference level is an independent measure used across the board to define who is covered and to set contribution limits for every worker.

The figure of 2,530,000 VND plays three roles at once:

• The threshold that defines who is covered: a monthly wage at or above this level brings the non-full-time group within compulsory social insurance.
• The contribution floor: this is the lowest wage used as the basis for contributions for workers within scope.
• The contribution cap: the maximum wage used as the basis for social and health insurance is 20 times the reference level, i.e. 50,600,000 VND per month from 01/07/2026. Wage above the cap attracts no further contributions.

How to calculate gross to net in 2026 in 8 steps

Gross-to-net calculation is the process of moving from total pre-deduction income (gross) to what the worker actually receives (net), after deducting insurance and personal income tax. The sequence for one month of pay:

Step 1 — Finalize attendance, overtime, and paid leave from the timekeeping data. Step 2 — Calculate pay by time or by output. Step 3 — Add supplementary amounts and allowances, classifying each by nature right away. Step 4 — Determine the basis for insurance contributions. Step 5 — Deduct the worker's 10.5% share (social insurance 8%, health insurance 1.5%, unemployment insurance 1%). Step 6 — Compute taxable income, deducting family-circumstance relief and exempt amounts. Step 7 — Apply the 5-bracket progressive schedule and withhold personal income tax. Step 8 — Arrive at the net wage, and record the employer's cost at the same time: 21.5% insurance plus 2% trade union funding, i.e. 23.5% on the wage fund used as the basis for contributions.

Example: a Region I worker with 1 dependent — base salary 26,000,000, responsibility allowance 2,000,000, shift meal 730,000, and fuel support 500,000 VND (gross 29,230,000 VND).

• Basis for insurance = 26,000,000 + 2,000,000 = 28,000,000 VND (the meal and fuel are excluded).
• The worker pays 10.5% = 2,940,000 VND. The employer pays 21.5% = 6,020,000 VND, plus 2% trade union funding = 560,000 VND.
• Taxable income = 26,000,000 + 2,000,000 + 500,000 = 28,500,000 VND (the 730,000 shift meal falls within the tax-exempt limit).
• Deducting insurance of 2,940,000 and family-circumstance relief of 21,700,000 (15,500,000 for oneself + 6,200,000 for one dependent) → assessable income of 3,860,000 VND, which falls in bracket 1 at a 5% rate → tax of 193,000 VND.
• Net wage = 29,230,000 − 2,940,000 − 193,000 = 26,097,000 VND. The total employer cost for this position is 35,810,000 VND (gross 29,230,000 + 6,020,000 insurance + 560,000 trade union funding).

To check any single position quickly without rebuilding a spreadsheet, a business can use the labor cost calculator and Gross ↔ Net converter to cross-check the manual result.

What is the total employer cost for one worker?

The total cost of one worker does not stop at the gross wage; it equals the gross wage plus the insurance and trade union funding the employer bears (23.5% on the wage fund used as the basis for contributions, up to the cap). Calculated for a Region I worker with no dependents, for the period from 01/07/2026:

• Gross 10 million → total cost 12,350,000 VND
• Gross 20 million → total cost 24,700,000 VND
• Gross 30 million → total cost 37,050,000 VND
• Gross 50 million → total cost 61,750,000 VND
• Gross 100 million → total cost 112,385,000 VND (only about 12.4% is added, because contributions have hit the cap, instead of 23.5%)

This figure is the basis for staffing budgets and quotations. When you need each component broken out by wage level and region, the labor cost calculator produces a detailed table on the spot.

Does a business without a grassroots trade union still pay the 2%?

Yes. Trade union funding is an amount equal to 2% of the wage fund used as the basis for social insurance, paid by the employer, mandatory for every business including those that have not established a grassroots trade union, under Luật Công đoàn 2024 số 50/2024/QH15. Because it is calculated on the same wage fund used as the basis for social insurance, it shares the same cap of 50,600,000 VND per month.

Two amounts that are easily confused must be kept apart:

• Trade union funding of 2%: paid by the employer, mandatory, booked as a business cost, and not deducted from the worker's wage.
• Union membership dues of 0.5%: paid by union members, up to 253,000 VND per month under Quyết định 61/QĐ-TLĐ (from 01/07/2025), and not deductible for personal income tax purposes.

This is why the total employer cost for one worker is 23.5% rather than the 21.5% that many spreadsheets leave out.

What is the 2026 social insurance contribution rate as a percentage?

The total wage-based deduction from both sides is 32% of the wage used as the basis for contributions, split as:

• Worker pays 10.5%: social insurance 8% + health insurance 1.5% + unemployment insurance 1%.
• Employer pays 21.5%: social insurance 17% + occupational-accident and occupational-disease insurance 0.5% (under Nghị định 58/2020/NĐ-CP) + health insurance 3% + unemployment insurance 1%.

The employer also pays a further 2% in trade union funding, bringing the employer's total cost to 23.5%. The cap for social and health insurance contributions is 50,600,000 VND per month. The unemployment-insurance cap, however, is set at 20 times the regional minimum wage and differs by region:

• Region I: 106,200,000 VND per month
• Region II: 94,600,000 VND per month
• Region III: 82,800,000 VND per month
• Region IV: 74,000,000 VND per month

Are lunch, fuel, and phone allowances subject to social insurance and tax?

Not every item of income enters the basis for social insurance or is taxable. Classify by nature:

• Both subject to social insurance and to personal income tax: pay by job or title, position, responsibility, seniority, and hazardous-work allowances, attraction allowances, and supplementary amounts with a specific determinable value paid regularly each period.
• Not subject to social insurance but still taxable: shift meals above the tax-exempt limit, monthly commuting/fuel support of a wage nature, housing, childcare support, business-result bonuses, and supplementary amounts whose value cannot be determined in advance.
• Neither subject to social insurance nor taxable: mid-shift meals within the 730,000 VND per month limit, per-diem and phone allowances within the internal financial rules, the portion of overtime pay above the ordinary hourly rate, and workwear within the norm.

The basis for social insurance classification lies in Luật BHXH số 41/2024/QH15 and the guidance on wages used as the basis for contributions; the tax basis lies in Thông tư 111/2013/TT-BTC and its amendments. A business with many allowances but no written wage policy is almost certain to be on weak ground when it has to explain itself.

How are overtime, night shifts, and holidays paid?

Under the Labor Code 2019: overtime on an ordinary day is at least 150%, on a weekly rest day at least 200%, and on public holidays and paid leave days at least 300% of the ordinary hourly rate (not counting the fully paid holiday wage already received). Night work adds a further 30%; overtime worked at night adds a further 20% of the daytime hourly rate for that work. Combined, the overtime multiplier ranges from 150% to 390%.

Overtime caps: no more than 40 hours/month and 200 hours/year, with certain specific sectors allowed up to 300 hours/year, subject to notifying the local labor authority. A business with a peak season should solve the problem by adding headcount rather than pushing hours past the cap — this is where the labor supply service is legally safer than a fine for breaching working-time rules.

The 5-bracket 2026 personal income tax schedule: from 7 brackets down to 5

From the 2026 tax period, personal income tax on wages and salaries applies a 5-bracket partial progressive schedule under Luật Thuế TNCN số 109/2025/QH15, replacing the previous 7-bracket schedule. The rates by monthly assessable income:

• Bracket 1 — up to 10 million VND: 5%
• Bracket 2 — over 10 to 30 million VND: 10%
• Bracket 3 — over 30 to 60 million VND: 20%
• Bracket 4 — over 60 to 100 million VND: 30%
• Bracket 5 — over 100 million VND: 35%

Assessable income equals taxable income less compulsory insurance and family-circumstance relief. From the 2026 tax period, family-circumstance relief is 15.5 million VND per month for oneself and 6.2 million VND per month for each dependent under Nghị quyết 110/2025/UBTVQH15. Three points to note:

• A dependent qualifies for relief only once registered and holding a tax code; the supporting documents must be completed before the finalization deadline, or the provisionally applied amount will be disallowed.
• The personal income tax withholding voucher is now an electronic voucher under Nghị định 123/2020/NĐ-CP (amended by Nghị định 70/2025/NĐ-CP). A business must store and be able to look these up, because this is the very data the tax authority reconciles against the worker's return.
• The 0.5% union membership dues are not among the amounts deductible when computing assessable income.

Reconciling payroll to zero discrepancy: a 5-step process

1. Lock the source data: the approved timesheet, wage decisions, and the list of increases and decreases during the month. Every figure afterward must trace back to one of these three sources.
2. Reconcile the payroll against the social insurance return: compare the total headcount, the total insured wage fund, and the increase/decrease list. Typical discrepancies come from those who started after the 15th and those on unpaid leave of 14 days or more in the month.
3. Reconcile the payroll against the accounting books: total wage cost and wage-based deductions must match the recorded figures, including amounts paid on behalf and advance recoveries.
4. Reconcile total annual income against form 05/QTT-TNCN and appendix 05-1/BK-QTT-TNCN: the sum of the 12 monthly payrolls must equal the total taxable income figure on the return, person by person, not just in total.
5. Draw up a discrepancy record: every discrepant line must have a cause, an adjusting document, and a responsible person. Without this step, the same discrepancy reappears in the same place next month.

Do it in-house or hand it to a specialist unit?

The real cost of doing payroll in-house has four parts: dedicated C&B staff, software and maintenance, reconciliation time each period, and the risk cost of back-collection or administrative penalties. Below around 50 workers, a part-time accountant can usually cope. From around 100–150 workers up, or where there are multiple wage regions, multiple shifts, and staff turnover above 10% per month, the hidden cost of doing it in-house typically exceeds the outsourcing fee.

Nhân Kiệt delivers the outsourced payroll service on a zero-discrepancy reconciliation principle: each period is handed over with an open-formula Excel reconciliation book so the business can check every line itself. For part-time and seasonal workers, or those already working without a proper contract, the labor formalization service moves them onto lawful contracts, with social insurance and taxes handled centrally.

An example to picture the cost: 10 part-time workers within scope for compulsory social insurance, on the reference level of 2,530,000 VND, generate 8,096,000 VND in insurance each month, of which the business bears 5,439,500 VND. Adding the 2% trade union funding (50,600 VND per person), the employer's share per person is 594,550 VND and the full cost is 860,200 VND per person per month.

Frequently asked questions

How much does family-circumstance relief rise to in 2026, and from when?

From the 2026 tax period, family-circumstance relief is 15.5 million VND per month for the taxpayer and 6.2 million VND per month for each dependent, under Nghị quyết 110/2025/UBTVQH15. A dependent must be registered and hold a tax code, and the supporting documents must be completed before the finalization deadline for the provisionally applied relief to stand. This rate applies for the whole 2026 tax period and is used with the new 5-bracket progressive schedule.

When must part-time workers pay compulsory social insurance?

Part-time workers fall within scope for compulsory social insurance from 01/07/2025 once both conditions are met: an employment contract of at least 01 month, and a monthly wage at or above the reference level, under Luật BHXH số 41/2024/QH15 and Nghị định 158/2025/NĐ-CP. The rule is based on the monthly wage stated in the contract, not on whether the person works 4 hours or 8 hours a day. Miss either condition and the worker is not yet within scope.

Why does the total income on the tax finalization system differ from the company payroll?

The common causes are timing differences in recognition (December wages paid in January of the following year fall into that later payment period), workers with income elsewhere not yet declared, or the business misclassifying taxable and exempt amounts. The fix is to trace each person by tax code across the 12 payrolls and appendix 05-1/BK-QTT-TNCN, find the exact discrepant line, then file a supplementary return with supporting documents.

If you are preparing your first 2026 payroll and want someone to review your allowance classification, wage-region configuration, and reconciliation process before you close it, call 0908 636 108 (Nguyễn Quốc Trung — Deputy General Director) directly or send a sample payroll to [email protected]. Nhân Kiệt will read it and point out the hidden discrepancies before you have to explain them to the authorities.

← All articles