Gross-to-net salary calculation is the process of determining the actual amount an employee receives after mandatory insurance contributions and personal income tax are deducted from the salary agreed in the employment contract. To calculate it correctly, employees first need to clearly understand the difference between Gross Salary and Net Salary. Once these concepts are clear, employees can apply the correct gross-to-net salary formula under 2026 regulations, including mandatory insurance contribution rates and the latest family circumstance deductions.

In addition, many employees ask a practical question when receiving a job offer: Should I accept a Gross Salary or a Net Salary package for better long-term benefits? This guide explains the advantages and disadvantages of each salary structure and answers frequently asked questions about the latest gross/net salary calculation methods.

What Are Gross Salary and Net Salary?

Gross Salary, also known as agreed salary or pre-deduction salary, is the total income amount that the employer commits to paying the employee before deducting mandatory insurance contributions and Personal Income Tax. This is usually the salary figure stated in the employment contract and is used as the basis for calculating Social Insurance and Health Insurance benefits.

Net Salary is the actual amount the employee receives in their bank account after all mandatory deductions have been made. In simple terms, this is the money employees actually take home and can use for monthly spending. For example, if an employment contract states a Gross Salary of VND 20 million, it does not mean the employee will receive VND 20 million. The actual take-home salary, or Net Salary, will be lower depending on the applicable tax and insurance deductions.

A common point of confusion is that, in addition to the insurance portion paid by the employee, which is 10.5% of Gross Salary, the employer must also contribute a separate insurance portion for the employee, approximately 21.5% of Gross Salary. This amount is not deducted from the employee’s salary, but it is part of the company’s actual employment cost. This is why the Gross Salary shown in the contract is lower than the company’s total workforce cost.

How to Calculate Net Salary from Gross Salary in 2026

The 2026 gross-to-net salary calculation follows a three-step deduction process:

1. Deduct mandatory employee insurance contributions
2. Deduct family circumstance allowances
3. Calculate and deduct Personal Income Tax

The final result is the employee’s monthly take-home salary.

The general formula is:

Net Salary = Gross Salary − Mandatory Insurance Contributions Paid by Employee − Personal Income Tax

However, to calculate Personal Income Tax accurately, the process should be performed in sequence.

Step 1: Calculate Mandatory Insurance Contributions Paid by the Employee

Total Employee Insurance Contribution = Gross Salary × 10.5%

This includes:

• Social Insurance: 8%
• Health Insurance: 1.5%
• Unemployment Insurance: 1%

Step 2: Calculate Taxable Income

Taxable Income = Gross Salary − Mandatory Insurance Contributions − Personal Deduction − Dependent Deduction, if any

From 2026, the applicable deductions are:

• Personal deduction: VND 15,500,000 per month
• Dependent deduction: VND 6,200,000 per dependent per month

Step 3: Calculate Personal Income Tax Using the Progressive Tax Rates

Personal Income Tax is calculated based on taxable income using the progressive tax schedule. From January 1, 2026, under the 2025 Personal Income Tax Law, the tax schedule is expected to apply five brackets, with tax rates ranging from 5% to 35%.

Practical Example

Assume Mr. Minh is an office employee. He is single, has no dependents, and has a Gross Salary of VND 20,000,000 per month stated in his employment contract. His Net Salary calculation under 2026 rules is as follows:

• Mandatory insurance contribution:
  20,000,000 × 10.5% = VND 2,100,000
• Taxable income:
  20,000,000 − 2,100,000 − 15,500,000 = VND 2,400,000
• Personal Income Tax:
  2,400,000 × 5% = VND 120,000
• Net Salary:
  20,000,000 − 2,100,000 − 120,000 = VND 17,780,000

Therefore, although the employment contract states a salary of VND 20 million, the actual amount Mr. Minh receives in his bank account is approximately VND 17,780,000. The difference between Gross and Net Salary is more than VND 2.2 million. Thanks to the increase in the personal deduction to VND 15.5 million per month from 2026, the Personal Income Tax payable is significantly lower than in previous years.

Mandatory Insurance Contribution Rates in 2026

The year 2026 marks several important changes in insurance policy as the 2024 Social Insurance Law officially takes effect, especially the replacement of the “base salary” concept with the new “reference level”.

Currently, there are three main types of mandatory insurance that employees and employers must contribute based on the salary used for insurance contribution purposes.

A key point for both employees and HR teams is the salary cap used as the contribution basis. For Social Insurance and Health Insurance, the maximum monthly salary used for contribution is 20 times the reference level. With the current reference level of VND 2,340,000, the contribution cap is equivalent to VND 46,800,000 per month. This means that if an employee’s actual Gross Salary exceeds this amount, the excess will not be subject to additional Social Insurance or Health Insurance contributions. This is especially relevant for senior professionals, managers, and executives.

Meanwhile, the Unemployment Insurance contribution cap is calculated based on 20 times the regional minimum wage. Under the latest regulations applicable in 2026, the minimum wage in Region I, including areas such as Ho Chi Minh City and Hanoi, is adjusted to VND 5,310,000, resulting in a maximum Unemployment Insurance contribution cap of VND 106,200,000 per month. Keeping insurance contribution rates, the reference level, and regional minimum wage updates aligned helps enterprises ensure payroll accuracy and enables employees to better protect their statutory benefits in 2026.

What Family Circumstance Deductions Apply When Calculating Personal Income Tax?

There are three main types of deductions that can be applied when calculating Personal Income Tax:

1. Personal deduction for the taxpayer
2. Dependent deduction
3. Deduction for charitable, humanitarian, or education-promotion contributions

Each category has different rates and application conditions.

Personal Deduction: The personal deduction for employees is VND 15,500,000 per month, equivalent to VND 186,000,000 per year. This applies under Resolution 110/2025/UBTVQH15, effective from the 2026 tax year, and represents a 40% increase from the previous level of VND 11,000,000 per month. This means that if an employee’s taxable income after deducting mandatory insurance does not exceed VND 15,500,000 per month, they are not required to pay Personal Income Tax. This is an important tax-free threshold that employees should understand to avoid incorrect withholding.

Dependent Deduction: Each valid registered dependent allows the employee to deduct an additional VND 6,200,000 per month from taxable income, increased from the previous level of VND 4,400,000 per month. Eligible dependents may include: children under 18, children attending university with no income, parents beyond working age or unable to work and with no income, spouses unable to work and with no income To apply this deduction, employees must register dependents with the tax authority or submit the necessary documents through their company’s accounting or HR department.

Charitable, Humanitarian, and Education-Promotion Contributions: These contributions can be deducted based on the actual amount contributed during the year, provided that valid supporting documents are issued by State-recognized organizations or funds. In practice, this deduction is less commonly used by employees because the documentation requirements can be complex.

Important note: The new deduction levels of VND 15.5 million and VND 6.2 million officially apply from the 2026 tax year under Resolution 110/2025/UBTVQH15, issued on October 17, 2025. Employees do not need to complete a separate procedure to benefit from the new levels. The company’s accounting or HR team is responsible for updating and applying them automatically in monthly payroll calculation.

Is Gross Salary or Net Salary More Beneficial?

Choosing between Gross Salary and Net Salary is essentially choosing how cash flow, tax obligations, and statutory contribution responsibilities are managed between the employee and the employer. To evaluate the two options objectively, they should be compared based on transparency, insurance benefits, and convenience in personal financial management.

Whether employees choose Gross or Net Salary, the company’s total cost and the employee’s statutory benefits should, in principle, be equivalent if calculated correctly. However, Gross Salary is often recommended by HR professionals because of its higher transparency. With Gross Salary, employees can clearly see the 10.5% contribution they pay into insurance funds and the amount of Personal Income Tax being withheld. This helps ensure that benefits such as maternity allowance, sickness benefits, and unemployment allowance are calculated based on the correct income level.

Net Salary, on the other hand, provides simplicity and predictability in monthly spending. Employees do not need to worry about complex Personal Income Tax calculations or changes in insurance reference levels affecting their take-home pay. However, the risk of Net Salary is that if the employment contract does not clearly state the insurance contribution salary, employees may suffer disadvantages if the employer sets the contribution basis at a low level, often the regional minimum wage, to reduce operating costs.

In summary, Gross Salary is a strong choice for employees who want transparency and greater control over long-term social security benefits. Net Salary is suitable for employees who prioritize convenience and monthly spending stability, provided that the insurance contribution basis is clearly agreed in the employment contract.

Automate Payroll and Benefits Management with SunFish HR

As shown above, gross-to-net salary calculation is not a simple arithmetic exercise. Its complexity increases exponentially when an enterprise must process payroll for dozens, hundreds, or even thousands of employees every month.

In 2026 alone, payroll systems must update at least three major regulatory changes:

• The personal deduction increases to VND 15.5 million per taxpayer
• The progressive tax schedule is streamlined from seven brackets to five brackets
• The regional minimum wage is adjusted upward

For enterprises still managing payroll in Excel, each policy change means the accounting or HR team must manually review and update formulas across payroll files. This is time-consuming and creates a high risk of errors.

This is exactly the problem SunFish HR is designed to solve. As an HRIS solution built specifically for the Vietnamese market, SunFish HR helps enterprises manage the entire payroll process automatically, accurately, and in continuous compliance with current regulations — without requiring HR teams to manually monitor every legal document or adjust Excel formulas by hand.

Payroll Processing in Under One Hour with Near-100% Accuracy. This result has been recorded in practice at Dharma Polimetal Tbk., one of more than 2,000 enterprises using SunFish HR. The system processes the entire payroll cycle at high speed, supports zero overtime during payroll runs, and is backed by more than 20 years of implementation experience across major enterprise groups in the region.

Unlimited Salary Component Management

SunFish HR supports unlimited setup of allowances, deductions, and neutral salary components with flexible custom formulas.

This enables the system to handle complex salary structures commonly found in Vietnamese enterprises, including:

• Daily wage calculation
• Piece-rate salary
• Non-insurance allowances
• Payments split across multiple bank accounts

Automated Tax Calculation and Multi-Jurisdiction Compliance

The system automatically calculates Personal Income Tax, Social Insurance, Health Insurance, and Unemployment Insurance according to local regulations and updates when legal changes occur. HR teams do not need to manually monitor policy documents or adjust calculation formulas. For companies with multiple branches across different regional minimum wage zones, SunFish HR processes all payroll scenarios on a single platform. The system also automatically consolidates and exports monthly and annual tax reports in the required formats.

Multi-Dimensional Data Integration and Real-Time Reporting

Payroll data is seamlessly connected with Attendance, Benefits, and Recruitment modules, eliminating manual data entry across disconnected systems. Management teams can access real-time dashboards and workforce cost analytics to support faster and more accurate decision-making.

Employee Self-Service Experience

Through the web-based self-service portal and mobile application, employees can independently:

• View detailed payslips
• Download salary slips
• Check insurance contribution levels
• Review Personal Income Tax information
• Use the integrated tax calculator

This reduces the need to contact HR for routine payroll-related requests. If your enterprise is still managing payroll manually or wants to upgrade its current payroll system to save time, reduce errors, and stay proactively compliant, book a demo with the SunFish HR team to receive a solution consultation tailored to your company size and industry requirements.

FAQ: Gross-to-Net Salary Calculation

How Can Gross Salary Be Calculated to Net Salary Online?

The fastest way is to use an online salary calculator. Users only need to enter their Gross Salary, number of dependents, and working region. The system will automatically calculate Net Salary and provide a detailed breakdown of each deduction. Reliable tools are available through SunFish HR.

How Is Net-to-Gross Salary Calculation Different for Foreign Employees?

There are two key differences compared with Vietnamese employees.

Tax Rate: Foreign employees who are tax residents in Vietnam, meaning they stay in Vietnam for 183 days or more in a year, are subject to the same progressive Personal Income Tax schedule as Vietnamese employees and are entitled to applicable family circumstance deductions. Foreign employees who are non-tax residents, meaning they stay in Vietnam for fewer than 183 days in a year, are subject to a fixed tax rate of 20% on total income and are not entitled to any deductions.

Double Taxation Agreement (DTA): Foreign employees from countries that have signed a Double Taxation Agreement with Vietnam may be exempt from Personal Income Tax if they meet all three conditions: they are present in Vietnam for fewer than 183 days, their income is paid by a foreign entity, the income is not generated from a permanent establishment in Vietnam, the employee must proactively submit an exemption or reduction application to the tax authority. This exemption is not applied automatically.

Basic Salary Calculation Guide

How to Calculate Daily Wage and Monthly Salary Based on Actual Working Days

The general formula is:

Actual Salary = Monthly Salary ÷ Standard Working Days × Actual Working Days

There are three common standard working-day bases.

22 Standard Working Days: This applies to office and service companies where employees take both Saturday and Sunday off. For example:

• Monthly salary: VND 15,000,000
  Actual working days: 20 days
• 15,000,000 ÷ 22 × 20 = VND 13,636,364

26 Standard Working Days: This applies to factories, retail, and roles that work on Saturdays and only take Sundays off. For example:

• Monthly salary: VND 12,000,000
  Actual working days: 24 days
• 12,000,000 ÷ 26 × 24 = VND 11,076,923

30 Standard Working Days: This applies to certain industries or roles using fixed monthly or shift-based arrangements, such as security, healthcare duty shifts, and transportation. For example:

• Monthly salary: VND 9,000,000
  Actual working days: 28 days
• 9,000,000 ÷ 30 × 28 = VND 8,400,000