SALARY CALCULATOR
GROSS SALARY ⭤ NET SALARY

Understanding how to convert gross salary to net salary is essential financial knowledge for both individuals and businesses. This article by terra provides a clear and practical guide to using a Gross to Net Salary Calculator, helping you accurately calculate take-home pay while avoiding common payroll and tax calculation mistakes.

How to Convert Gross Salary to Net Using a Gross to Net Salary Calculator

To convert gross salary to net salary, employees must calculate and deduct mandatory contributions required by law. The gross-to-net conversion process mainly involves determining compulsory insurance contributions and personal income tax (PIT). A Gross to Net Salary Calculator helps simplify this process and ensures accurate take-home pay calculations.

Formula for Converting Gross Salary to Net Salary

Net Salary = Gross Salary − (Mandatory Insurance Contributions + Personal Income Tax)

To convert gross salary into net salary, you first need to calculate the amounts payable for mandatory insurance and personal income tax. Below are the detailed steps:

Step 1: Identify Mandatory Insurance Contributions

This includes the total amount employees are required to contribute to social insurance (SI), health insurance (HI), and unemployment insurance (UI). In Vietnam, the current employee contribution rate is 10.5% of the monthly salary used as the insurance contribution base, broken down as follows:

• Social Insurance (SI): 8%
• Health Insurance (HI): 1.5%
• Unemployment Insurance (UI): 1%

Note: The unemployment insurance contribution may be affected by the Vietnam minimum wage, which varies by region. Therefore, accurately identifying the employee’s working location is essential when calculating insurance contributions using a Gross to Net Salary Calculator.

Regional Minimum Wage Levels Applied Before January 1, 2026

Before the new regional minimum wage takes effect on January 1, 2026, the minimum wage applied to employees in Vietnam is governed by Decree No. 74/2024/ND-CP, which has been effective since July 1, 2024. These wage levels serve as an important reference point for comparing and assessing minimum wage adjustments in the subsequent period, especially when using a Gross to Net Salary Calculator.

Based on these wage levels, the Government continues to review economic and social conditions and subsequently issues a new regional minimum wage framework effective from January 1, 2026, with the aim of ensuring a minimum income standard for employees. These adjustments also directly impact insurance contributions and take-home pay calculations performed through a Gross to Net Salary Calculator.

Regional Minimum Wage Table Effective from January 1, 2026

From January 1, 2026, Vietnam’s regional minimum wage is applied in accordance with Decree No. 293/2025/ND-CP, replacing Decree No. 47/2024/ND-CP. This adjustment aims to ensure a minimum standard of living for employees while maintaining a balance with employers’ financial capacity. These updated wage levels play a critical role in salary calculations, particularly when using a Gross to Net Salary Calculator.

These regional minimum wage adjustments directly affect insurance contribution bases, taxable income, and employees’ take-home pay

The list of Region I, Region II, Region III, and Region IV localities is specified in the Appendix issued together with this Decree.

Step 2: Calculate Personal Income Tax (PIT)

Personal Income Tax (PIT) is calculated based on an individual’s taxable income and applied according to the progressive tax rate system. The basic formula for determining PIT is as follows:

Personal Income Tax = (Total Income − Tax-Exempt Amounts − Family Deductions) × Applicable Tax Rate

Family deductions, including deductions for the taxpayer and dependents, play a crucial role in reducing taxable income. The applicable tax rate increases progressively across different income brackets. 

Progressive Personal Income Tax Rates for 2025

Currently, the progressive personal income tax rates on income from salaries and wages continue to be applied in accordance with Vietnam’s prevailing Personal Income Tax Law, which consists of seven income brackets. Below is the detailed personal income tax table applicable in 2025, commonly used in payroll calculations and Gross to Net Salary Calculator systems.

Latest Progressive Personal Income Tax Rates for 2026 Under the Amended Personal Income Tax Law

On the morning of December 10, the National Assembly officially passed the amended Personal Income Tax Law, which will take effect from January 1, 2026. Under the new regulation, the progressive personal income tax structure is reduced from seven to five brackets, while the highest tax rate remains at 35%, applicable to monthly taxable income exceeding VND 100 million (instead of over VND 80 million as under the current system).

According to the Government, maintaining the top tax rate at 35% aligns with international and regional standards, while ensuring tax fairness and preventing tax reductions from disproportionately benefiting high-income earners. These changes are particularly important for payroll planning and income calculations performed using a Gross to Net Salary Calculator.

Below is the detailed personal income tax table effective from January 1, 2026

Thanks to this adjustment, many middle-income earners will no longer be required to pay personal income tax, even if they have few or no dependents, after deducting mandatory insurance contributions and family deductions.

Personal Income Tax Rates (Applicable from 2026 and Currently in Force)

Step 3: Determine Net Salary (Take-Home Pay)

After calculating the total mandatory insurance contributions and personal income tax payable, the net salary is determined by subtracting these two deductions from the gross salary:

Net Salary = Gross Salary − (Mandatory Insurance Contributions + Personal Income Tax)

This amount represents the actual monthly income received by the employee from the employer after fulfilling all financial obligations in accordance with labor and tax regulations.

In addition to the traditional calculation method, to save time and ensure maximum accuracy, you can use terra’s Gross to Net Salary Calculator, conveniently placed at the top of this article. The calculator allows you to quickly obtain precise results without performing complex manual calculations.

See more:

• How to calculate overtime pay for employees 
• Payroll software for businesses

How to Convert Gross Salary to Net Salary

To convert net salary (take-home pay) into gross salary (total income), a reverse calculation is required, which is significantly more complex than a simple addition. In essence, you must add back mandatory deductions such as compulsory insurance contributions and personal income tax (PIT) to the net salary.

However, the calculation is not straightforward for two main reasons:

• Personal income tax is calculated using a progressive tax system, meaning tax rates increase as income rises.
• Mandatory insurance contributions are subject to statutory caps, which limit the maximum contribution amount.

Due to the complexity of progressive tax brackets and insurance contribution caps, converting net salary to gross salary typically requires the use of automated tools for efficiency and accuracy.

Formula for Converting Net Salary to Gross Salary

Gross Salary = Net Salary + Employee’s Mandatory Insurance Contributions + Personal Income Tax

What Is Gross Salary?

Gross salary is the total income an employee earns before mandatory deductions such as social insurance, health insurance, unemployment insurance, and personal income tax (if applicable). This figure is usually stated in the employment contract; however, the actual amount received each month is lower after deductions. 

Advantages of Gross Salary

• Transparency in income calculation:

Gross salary allows employees to proactively calculate mandatory deductions and accurately determine their net salary, supporting better personal financial planning through a Gross to Net Salary Calculator.

• Stronger initial motivation:

A higher gross salary figure can create positive motivation, as it reflects the total agreed compensation before deductions.

• Protection of insurance benefits:

Employees clearly understand the salary base used for mandatory insurance contributions, making it easier to verify employer compliance and safeguard long-term benefits such as pensions, unemployment support, and healthcare coverage.

• Easier salary negotiation:

Gross salary represents a higher, all-inclusive figure, providing psychological and practical advantages when negotiating compensation with employers.

Disadvantages of Gross Salary

• Unclear take-home pay:

Employees cannot immediately determine their actual take-home pay (net salary) without calculating tax and insurance deductions.

• Requires legal and tax knowledge:

Employees must stay updated on changes to personal income tax regulations and mandatory insurance contribution rates to ensure accurate calculations.

• Risk of calculation errors:

Due to the complexity of tax formulas, especially progressive personal income tax, manual calculations may lead to mistakes without using a Gross to Net Salary Calculator.

Gross Salary Formula

Gross Salary = Net Salary + Personal Income Tax + Social Insurance + Health Insurance + Unemployment Insurance + Other Deductions

Other deductions may include trade union fees, salary advances, compensation payments, and similar items.

In summary, gross salary represents the employee’s total income before any mandatory deductions are applied, serving as the foundation for accurate payroll calculations and salary conversions using a Gross to Net Salary Calculator.

What Is Net Salary?

Net salary is the actual amount of income an employee takes home each month. This amount is calculated after all mandatory deductions have been fully withheld, including social insurance, health insurance, unemployment insurance, and personal income tax (PIT). As a result, net salary is always lower than gross salary and represents the final payment that employees can freely use. 

Advantages of Net Salary

• Maximum convenience:

Employees do not need to worry about calculating, declaring, or paying taxes and mandatory insurance contributions, as these obligations are handled by the employer.

• Easier personal budgeting:

Knowing the exact amount credited to the bank account each month helps employees plan expenses more effectively and avoid financial shortfalls.

• Reduced administrative risk:

Employees minimize the risk of personal errors in tax and insurance declarations by relying on employer-managed payroll processes.

Disadvantages of Net Salary

• Lack of transparency:

Employees may not clearly understand their total income (gross salary) or the specific deductions applied.

• More difficult salary comparison and negotiation:

Since most labor markets use gross salary as the benchmark, evaluating or negotiating compensation based on net salary can be challenging.

• Passive impact from policy changes:

Take-home pay may decrease automatically if tax or insurance regulations change, even if the agreed salary remains unchanged.

Net Salary Formula

Net Salary = Gross Salary − (Personal Income Tax + Social Insurance + Health Insurance + Unemployment Insurance + Other Deductions)

Net salary represents the employee’s income after all mandatory deductions have been applied and serves as the key output in payroll calculations performed using a Gross to Net Salary Calculator.

Personal Income Tax Rates Comparison

(Before December 31, 2025 vs. From January 1, 2026)

Taxable income = Total income (Gross Salary) − Insurance contributions − Deductions − Tax-exempt amounts

Tax Deductions When Calculating Personal Income Tax (PIT)

When calculating personal income tax, several deductions are applied, including family deductions for the taxpayer and dependents, which have been adjusted under the latest regulation.

Previous Deduction Levels (Before 01/01/2026)

• Taxpayer personal deduction: VND 11,000,000
• Dependent deduction: VND 4,400,000 per dependent

Updated Deduction Levels (From 01/01/2026 – Latest)

• Taxpayer personal deduction: VND 15,500,000
• Dependent deduction: VND 6,200,000 per dependent

These increased deduction thresholds significantly reduce taxable income, allowing more employees, especially middle-income earners.

Tax-Exempt Income

Tax-exempt income includes welfare- and employee-support-related benefits as prescribed by law, such as:

• Hazardous or dangerous work allowances
• Childcare and child-raising support payments
• Scholarships
• Transportation allowances
• Meal allowances
• Employer-provided housing (subject to statutory conditions)

These amounts are exempt from personal income tax only if they are determined and paid in full compliance with applicable regulations. 

Gross vs. Net Salary Comparison Table Based on the Latest 2026 Updates

Below is a comparison table illustrating the differences between gross salary and net salary at various income levels, based on the following assumptions:

• No tax-exempt income
• No dependents
• Social insurance contribution base = Gross salary

So how will the results change when dependents are included?

Net Salary Comparison Table by Number of Dependents

Below is a comparison table showing net salary amounts based on the number of dependents at different gross salary levels:

Note: The salary figures above do not apply to individuals with tax-exempt income, and the social insurance contribution base is assumed to be equal to the gross salary.

Detailed Example of Net Salary Calculation

Illustrative example:
An employee earns a gross salary of VND 25,000,000 per month and has 1 dependent.
(Assumption: the social insurance contribution base equals the gross salary.)

1. Mandatory Insurance Contributions

The employee contributes 10.5% of the gross salary:

25,000,000 × 10.5% = VND 2,625,000

2. Determine Taxable Income

Applicable deductions in 2026 include:

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

Taxable income is calculated as follows:

Taxable Income = 25,000,000 − 2,625,000 − 15,500,000 − 6,200,000 = VND 675,000

3. Calculate Personal Income Tax

With a taxable income of VND 675,000, the employee falls under Bracket 1 of the progressive tax schedule (5% tax rate):

Personal Income Tax = 675,000 × 5% = VND 33,750

4. Net Salary (Take-Home Pay)

The actual amount received by the employee is:

Net Salary = 25,000,000 − 2,625,000 − 33,750 = VND 22,341,250

See more: What is a Fixed Salary?

Frequently Asked Questions About Gross and Net Salary

When entering the labor market, having a clear understanding of gross salary and net salary is essential for every individual. To support employees in better understanding these two salary concepts, terra has compiled a list of frequently asked questions below.

Why Should Employees Understand How to Convert Gross Salary to Net Salary?

Understanding how to convert gross salary to net salary allows employees to accurately determine their take-home pay after tax and insurance deductions, while proactively managing their income and employment benefits. By clearly understanding what net salary is and how deductions are calculated, employees can verify their payroll statements and avoid incorrect or non-transparent deductions.

In practice, whether salary is structured as gross-to-net or net-to-gross, the total compensation still falls within the employer’s fixed budget. The key difference lies in transparency. A gross salary structure enables employees to clearly monitor contributions to social insurance, health insurance, unemployment insurance, and personal income tax, while a net salary structure may obscure insurance contribution levels.

Therefore, in the long term, having in-depth knowledge of gross salary and how to convert gross salary to net salary provides employees with better control over their rights and obligations, as well as stronger leverage in salary negotiations. If negotiating a net salary is unavoidable, employees should ensure that the insurance contribution base salary is clearly defined to avoid legal risks and potential loss of benefits.

Net Salary or Gross Salary – Which Is Truly More Beneficial for Employees?

In essence, net salary and gross salary differ mainly in how compensation is presented. Whether converting gross salary to net salary or net salary to gross salary, the total compensation typically remains within the employer’s fixed budget, so it is not necessarily true that a net salary is “more beneficial.” The key difference lies in transparency and employee rights.

Receiving a net salary can make it difficult for employees to verify the exact base used for insurance contributions and tax calculations. In contrast, working under a gross salary structure and using a Gross to Net Salary Calculator to convert gross salary to net salary, which allows employees to proactively review and verify social insurance, health insurance, unemployment insurance, and personal income tax deductions.

Therefore, from a long-term perspective, gross salary generally provides better protection of employee rights due to higher transparency and control. If negotiating a net salary is unavoidable, employees should clearly request confirmation of the insurance contribution base salary from the outset to avoid legal risks and potential loss of benefits.

Should You Negotiate a Net Salary or a Gross Salary?

Choosing whether to negotiate a net salary or a gross salary depends on personal priorities and your understanding of salary structures. Negotiating a gross salary offers greater transparency regarding total income and mandatory deductions, allowing employees to proactively monitor and protect their employment benefits. In contrast, negotiating a net salary ensures a stable take-home amount, as the employer handles all calculations and payments related to insurance and taxes; however, employees may have limited visibility into the details of these deductions. 

Legal Risks of Not Clearly Defining Net Salary vs. Gross Salary

• Incorrect insurance contributions:

A lack of understanding of net and gross salary or not clearly knowing what net salary represents, which may result in social insurance contributions being calculated on a lower-than-actual salary base. This can reduce employee benefits related to sickness, maternity leave, unemployment, or retirement.

• Potential tax compliance risks:

When receiving a net salary without controlling the gross salary used for insurance and tax declarations, employees may face risks if the employer underreports or miscalculates personal income tax, especially in cases of tax audits, back payments, or penalties.

• Disadvantages in labor disputes:

Employment contracts that do not clearly specify whether the salary is net or gross make it difficult for employees to prove actual income and fulfilled obligations, putting them at a disadvantage during labor dispute resolution. This lack of clarity can also limit employees’ ability to protect their legal rights in the long term.

Important Considerations When Negotiating Net Salary vs. Gross Salary

When negotiating salary, employees should not focus solely on the number stated in the contract. Instead, it is essential to clearly understand the difference between net salary and gross salary to protect both take-home income and long-term employment benefits.

1. Clearly Identify Whether the Salary Is Net or Gross

• Gross salary: The salary amount before deductions for social insurance, health insurance, unemployment insurance, and personal income tax (PIT).
• Net salary: The actual take-home pay after all mandatory deductions have been applied.

Employees should proactively request that the employer clearly specify whether the agreed salary is net or gross to avoid misunderstandings during payroll processing.

2. Review Allowances and Benefits Carefully

Clarify whether allowances such as meal, transportation, phone, or fuel allowances are included in the gross salary or paid separately. At the same time, confirm that the employer contributes fully to social insurance, health insurance, and unemployment insurance in accordance with regulations.

3. Proactively Calculate Take-Home Pay

• If negotiating a gross salary, convert gross salary to net salary to determine the exact monthly take-home amount—using a Gross to Net Salary Calculator for accuracy.
• If negotiating a net salary, confirm the gross salary used as the insurance contribution base to avoid underpayment of insurance and potential loss of future benefits.

4. Compare with Market Salary Levels

Research average salary ranges by industry, position, and experience level to make a reasonable proposal and avoid accepting compensation that is unusually low or inconsistent with market standards.

5. Clearly Document All Agreements in the Contract

All terms related to salary, allowances, bonuses, net/gross structure, and tax and insurance obligations should be explicitly stated in the employment contract to minimize the risk of future disputes.

6. Be Proactive and Transparent During Salary Negotiation

Prepare your expected salary range in advance, clearly decide whether you prefer net or gross salary, and ask detailed questions about salary calculation methods, pay cycles, and applicable deductions.

Conclusion: Effective salary negotiation is not about choosing the highest number on paper, it is about understanding how gross salary is converted to net salary, the related insurance and tax obligations, and the associated benefits. This knowledge helps ensure stable take-home income and protects employees’ long-term interests, especially when supported by a reliable Gross to Net Salary Calculator.

Yes. Gross salary is the total income an employee earns before any mandatory deductions are applied, including personal income tax (PIT) and compulsory insurance contributions. This is the overall amount that employers and employees typically agree on at the initial stage of salary negotiation.

To determine the actual take-home pay, employees need to convert gross salary to net salary by applying the required deductions.

Does Gross Salary Include Insurance Contributions?

Yes. Gross salary is the total income that includes the mandatory insurance contributions payable by the employee, such as social insurance, health insurance, and unemployment insurance. This is why, when converting gross salary to net salary, you must deduct your portion of insurance contributions along with personal income tax to determine your actual take-home pay. Using a Gross to Net Salary Calculator helps ensure these deductions are applied correctly.

Does Net Salary Include Allowances?

Yes. Net salary usually includes allowances such as meal, transportation, phone, and responsibility allowances if these items are included in the original gross salary package.

When converting gross salary to net salary, these allowances may be subject to tax and insurance deductions (where applicable). The remaining amount is then included in your final take-home pay.

What Fees and Contributions Are Required When Receiving Net Salary or Gross Salary?

Whether you receive a gross salary or a net salary, employees are legally required to pay mandatory contributions under Vietnamese law. These include:

• Social Insurance (SI): covering retirement, sickness, and maternity benefits.
• Health Insurance (HI): providing access to medical examination and treatment.
  Unemployment Insurance (UI): supporting employees in the event of job loss.
• Personal Income Tax (PIT): applicable when taxable income exceeds the statutory threshold.

Is Personal Income Tax Deducted from Gross Salary or Net Salary?

Personal income tax (PIT) is deducted directly from gross salary. Gross salary serves as the basis for determining taxable income and calculating PIT according to the progressive tax schedule. Once the tax amount is determined, the employer deducts PIT together with mandatory insurance contributions from the gross salary to arrive at the employee’s net salary (take-home pay).

terra Payroll Services

terra provides outsourced payroll services (BPO) and HR management software (SaaS) designed to help businesses automate payroll processes, reduce risks, and ensure high accuracy while remaining fully compliant with labor and tax regulations. 

Key Benefits of terra Payroll Services

• Time optimization: Save up to 90% of payroll processing time with real-time system updates and automation.

• High accuracy: Customizable calculation formulas eliminate discrepancies and minimize human error.

• Easy management and data security: Send digital payslips within one minute, enjoy free system integration, and manage access with clear role-based permissions.

• Centralized platform: All payroll, insurance, and tax data are managed on a single, unified system, improving transparency and control.

• Human resource data management: terra offers integrated tools such as payroll software and HR management systems that help businesses organize and securely store employee data in a structured manner.

If you are looking for a comprehensive solution to build or optimize your company’s payroll system, contact terra today. Call our hotline +84 28 7102 0608 to receive a detailed quotation for outsourced payroll services. terra’s professional consulting team is always ready to support you, answer questions in detail, and help your business optimize payroll management costs effectively.

Contact terra now to receive personalized consultation and tailored payroll solutions that best fit your business needs.

Conclusion

Through this article, we have explored the differences between gross salary and net salary and addressed common questions related to payroll calculations. Understanding how to convert gross salary to net salary, whether manually or using a Gross to Net Salary Calculator, which helps individuals gain clarity on their actual income and enables businesses to build transparent and compliant compensation policies. We hope this information empowers you to manage finances and payroll decisions with greater confidence.