PIT deductions for medical and education expenses from 1 July 2026

On 18 September 2026, the Hanoi City Tax Authority issued Official Letter No. 47199/HAN-QLDN5 to the Department of Health, the Department of Education and Training, ward- and commune-level People's Committees, and enterprises and organizations in the city, consolidating the rules on a new personal income tax (PIT) deduction: medical and tuition expenses of the taxpayer and their dependants, applicable from 1 July 2026 under Decree No. 253/2026/ND-CP. The letter also reminds healthcare and education institutions of their obligations to issue invoices and expense statements - the prerequisite for employees to claim the deduction.

1. The two new deductions and their caps

Under Clause 2, Article 49 of Decree No. 253/2026/ND-CP, a resident individual earning income from salaries and wages may deduct from taxable income the following expenses incurred for themselves and their dependants:

2. Three conditions for the deduction

Clause 3, Article 49 of Decree No. 253/2026/ND-CP sets three conditions that must all be met:

1. Lawful invoices and supporting documents. For medical expenses, a Statement of medical examination and treatment expenses in the form prescribed by the Ministry of Health is also required.
2. The invoices and documents must bear the information of the taxpayer or the dependant.
3. The expenses must not have been paid from any other source - including sponsorship, support or payment on behalf by any organization or individual, the state budget, the social insurance or health insurance fund, or insurance payouts in any form.

3. Expenses excluded from the deduction

Under Clause 4, Article 49 of Decree No. 253/2026/ND-CP, the following two groups of expenses are not counted towards the deduction:

(a) Amounts paid by the employer that are already excluded from taxable income (Points b, g and i, Clause 4, Article 8 of Decree No. 253/2026/ND-CP):

• Employer support for the examination and treatment of critical illnesses of the employee and their family members (children, spouse, parents and parents-in-law, step-parents, adoptive parents) - capped at the hospital fees remaining after any insurance payout; critical illnesses are determined under Ministry of Health regulations (Point b);
• Tuition fees for children of foreign employees studying in Vietnam, or of Vietnamese employees working abroad whose children study abroad, from pre-school to upper secondary level, paid by the employer on the employee's behalf (Point g);
• Training costs to upgrade qualifications and skills relevant to the employee's work or under the employer's training plan (Point i).

The letter explains that these amounts have already been classified as income not in the nature of salaries and wages and are excluded from taxable income; they therefore cannot be counted a second time as a deduction.

(b) Medical expenses for which a tax reduction due to critical illness has been granted under Article 40 of Decree No. 253/2026/ND-CP — where a tax reduction applies, no deduction may be claimed for the same expenses.

4. To claim the deduction, employees must finalize their own tax

Under Clause 3, Article 51 of Decree No. 253/2026/ND-CP, an individual who requests the deductions under Article 49 (or a tax reduction under Article 40) must carry out PIT finalization themselves. The letter stresses that in this case the employee may not authorize the income-paying organization to finalize tax on their behalf.

A further note: under Clause 5, Article 49 of Decree No. 253/2026/ND-CP, medical and education deductions arising in a given year may only be deducted from the taxable income of that year and may not be carried forward to the following year. Where tax has already been finalized without sufficient invoices and documents, any adjustment of the tax liability follows the law on tax administration.

5. Invoice and expense-statement requirements for healthcare and education institutions

So that employees have adequate documentation, the letter restates the rules that healthcare and education institutions must comply with:

Electronic invoices - Decree No. 254/2026/ND-CP (30 June 2026):

• When providing services, the seller must issue an electronic invoice to the buyer, except in the cases exempt from electronic invoices under Article 7 (Clause 1, Article 4).
• The time of invoicing for services is the time the service is completed, regardless of whether payment has been collected; where payment is collected before or during service provision, the invoice is issued at the time of collection, except for deposits under the Civil Code (Clause 2, Article 9).
• For healthcare facilities using hospital-fee management software: if the patient does not request an invoice, the facility issues a consolidated electronic invoice at the end of the day for the services performed that day; if the patient requests one, an electronic invoice must be issued to them. Invoices to the social insurance agency are issued when that agency settles and finalizes the costs (Point m, Clause 4, Article 9).
• Buyer information: where a consumer provides their name, address and personal identification number, the invoice must show them in full; where none is provided, the invoice states "Sold to consumer". An invoice without buyer information is not valid for recording expenses or for tax finalization (Point b, Clause 4 of the Appendix on invoice contents attached to Decree No. 254/2026/ND-CP).

Statement of medical expenses - Decision No. 697/QD-BYT (19 March 2026):

• For each episode of care, the facility prepares one statement for its records and one statement for the patient (Clause 1, Article 2).
• Facilities that have adopted electronic medical records prepare an electronic statement, deliver it to the patient by electronic means and need not prepare a paper copy; an electronic statement with full digital signatures is equivalent to a paper original (Clause 2, Article 2).

6. Requests from the Hanoi City Tax Authority

• Healthcare and education institutions: issue and use invoices at the correct time and prepare statements of medical expenses in accordance with Decree No. 254/2026/ND-CP and Decision No. 697/QD-BYT.
• Enterprises and employers: communicate to all employees the new deduction, the invoice and statement requirements, the excluded expenses (Section 3) and the self-finalization requirement (Section 4).
• Department of Health, Department of Education and Training, ward- and commune-level People's Committees: coordinate in directing institutions in the city to comply with the invoice and statement rules.

Taxpayers encountering difficulties should contact their directly managing tax authority.

💡 Recommendations for enterprises

1. Run internal communications in Q4 2026: guide employees to obtain electronic invoices bearing their own or their dependant's correct name and personal identification number, and to request the expense statement at healthcare facilities - an invoice marked "Sold to consumer" will not qualify.
2. Review the 2026 tax finalization process: employees who wish to claim the deduction cannot authorize the company to finalize on their behalf; HR and accounting should notify them early so they can prepare for self-finalization, and issue withholding tax certificates on time.
3. Clearly classify amounts the company has already supported (critical-illness treatment, tuition for foreign employees' children, training) - these are already excluded from taxable income and employees may not claim them again as a deduction.
4. Remind employees of the caps - VND 23 million (medical) and VND 24 million (education) per year, covering both the taxpayer and their dependants, and applicable only to the year in which the expense arises.

This newsletter is prepared by Crowe Vietnam for general information purposes only and does not constitute advice for any specific case. Enterprises should refer to the original legal instruments and consult professional advisors before applying the above to their particular circumstances.