Laos Raises Tax-Free Income Threshold Under New Personal Income Tax Rules

Laos has officially raised the monthly income exempt from personal income tax from LAK 1.3 million (USD 58.8) to LAK 2.5 million (USD 113.5), giving lower-income workers a larger tax-free allowance while leaving tax rates unchanged. 

SoutheastAsians & Pacific Islanders

The revised personal income tax system, promulgated by a presidential decree on 6 August 2025, takes effect this month and applies to salaries, wages, bonuses, allowances and other employment income, according to the Ministry of Finance.

Under the new system, monthly earnings of up to LAK 2.5 million are exempt from income tax. Income above that threshold will continue to be taxed progressively at rates ranging from 5 percent to 25 percent, with each rate applying only to the portion of income within the relevant bracket.

Previously, workers began paying income tax once their monthly income exceeded LAK 1.3 million.

With the current regulations, If a person earning LAK 6 million (USD 272) a month would pay no tax on the first LAK 2.5 million. The next LAK 2.5 million would be taxed at 5 percent, while the remaining LAK 1 million would be taxed at 10 percent.

Farming and Property Transfer

The revised regulations also update tax rates for several other categories of income.

Transfers or sales of agricultural land for farming will be taxed at 1 percent of total income. A 2 percent rate applies to income from share sales, property transfers, land-use rights, and business activities including agriculture, handicrafts, trade and services where annual income exceeds LAK 100 million (USD 4,528).

Lottery prizes above LAK 10 million (USD 454), gifts or awards exceeding LAK 5 million (USD 227), intellectual property income, qualifying sports and entertainment earnings, and construction or repair services will be subject to a 5 percent tax. Dividends, profit distributions and other shareholder benefits will continue to be taxed at 10 percent.

The changes come as Laos seeks to strengthen public finances while easing pressure on households after several years of high inflation and currency volatility. Official figures show the economy expanded by 5 percent in the first half of 2026, while annual inflation slowed to 7.4 percent in June, according to data presented during the government’s expanded cabinet meeting on 25 June. 

SoutheastAsians & Pacific Islanders

source: https://laotiantimes.com/2026/06/30/laos-raises-tax-free-income-threshold-under-new-personal-income-tax-rules/