Caribbean & Atlantic
Puerto Rico tax rates 2026
This US territory runs its own income tax, up to 33%, plus an 11.5% sales tax. Bona fide residents can exclude Puerto Rico-source income from US federal tax, and Act 60 sweetens the deal further, with a 4% business tax and 0%/4% on investment income. Anyone who is not a US citizen first needs US immigration status to live there, such as a green card by investment.
The taxes
| Personal income (top) | 33%Progressive up to 33%, plus a gradual adjustment surtax. US citizens living in PR can exclude PR-source income from US federal tax under IRC §933. They still owe US tax on any non-PR income. |
|---|---|
| Corporate income | Up to 37.5% (18.5% normal tax plus graduated surtax) |
| Capital gains | 15% on long-term gains (Act 60 investors: 0% if the decree application is filed by 31 Dec 2026, 4% for applications from 1 Jan 2027) |
| VAT / IVU (sales and use tax) | 11.5% |
| Dividends (WHT) | 15% (Act 60 investors: 0%/4%) |
| Interest (WHT) | 10% |
| Royalties (WHT) | 29% |
| Social security (employee) | 7.65% (US FICA) |
| Social security (employer) | 7.65% (US FICA) |
| Wealth tax | None |
| Inheritance / estate | PR estate and gift tax. US federal estate tax may also apply. |
| Property tax | Municipal property tax (CRIM) on real and personal property |
| Other | US federal payroll taxes apply. Act 60 export-services businesses are taxed at 4%. |
Puerto Rico income tax brackets 2026
Net taxable income of resident individuals, tax year 2026 (Section 1021.01 table, unchanged from 2025)
| Up to USD 9,000 | 0% |
|---|---|
| USD 9,000 to 25,000 | 7%7% of the excess over $9,000 |
| USD 25,000 to 41,500 | 14%$1,120 plus 14% of the excess over $25,000 |
| USD 41,500 to 61,500 | 25%$3,430 plus 25% of the excess over $41,500 |
| Over USD 61,500 | 33%$8,430 plus 33% of the excess over $61,500 |
The tax from the table is cut to 95%, or to 92% when gross income is $100,000 or less. Above $500,000 of net taxable income a gradual adjustment claws back the benefit of the bands below 33% and of the personal and dependant exemptions.
Who is a tax resident of Puerto Rico
The Puerto Rico Treasury Department, known as Hacienda, decides residence on facts and circumstances, starting from domicile. Anyone present on the island for 183 days in a calendar year is presumed resident unless the stay is plainly temporary. Residents report worldwide income. In the year of arrival, foreign income earned before the move stays off the Puerto Rico return; in the year of departure, everything earned up to the change of residence is reported, plus any Puerto Rico-source income received afterwards.
For US federal purposes, bona fide residence takes three tests: presence of 183 days in the tax year, or 549 days across three years with at least 60 in each; no tax home outside Puerto Rico; and no closer connection to the United States or another country. Passing all three lets a US citizen exclude Puerto Rico-source income from federal tax under Section 933. Form 8898 goes to the IRS for the year of the move when worldwide gross income tops $75,000.
Tax year, returns and payment dates
The tax year is the calendar year. The 2026 return is due on 15 April 2027 and is filed electronically through SURI, the Hacienda online system. Form SC 2644, filed by the deadline, grants an automatic six-month extension to 15 October, but any balance of tax is still due in April. An amended return can be filed within four years of the original.
Tax not covered by withholding is paid as estimated tax in four equal instalments: 15 April, 15 June, 15 September and 15 January of the following year. No estimated payments are due when the year's total tax is $1,000 or less. Every resident with gross income above exemptions files unless all tax was withheld at source, and anyone with $25,000 or more of income subject to the alternative basic tax files regardless.
How non-residents are taxed in Puerto Rico
Non-residents pay Puerto Rico tax only on Puerto Rico-source income. A non-resident alien with no trade or business on the island pays a flat 29% on that income, 15% on dividends and 33% on a distributive share from a pass-through entity. Once the person is engaged in business in Puerto Rico, the regular graduated rates apply to Puerto Rico-source income and to income connected with that business. US citizens living elsewhere file whenever their Puerto Rico-source income exceeds exemptions and was not fully withheld.
Dividends, interest and capital gains for residents
Residents pay a 15% preferential rate on capital gains and on dividends, well below the 33% top band. Eligible interest can be taxed at 10% instead of regular rates: interest on bonds of companies that put the money into their Puerto Rico business within 24 months, and on new mortgages over Puerto Rico homes. Act 60 resident investors replace these rates with the decree rate on gains, interest and dividends earned after the move.
Social Security and Medicare in Puerto Rico
Workers in Puerto Rico pay into the US federal system. In 2026 employer and employee each pay 6.2% Social Security tax on wages up to $184,500 and 1.45% Medicare tax on all wages, with an extra 0.9% Medicare tax withheld from the employee on wages above $200,000. Self-employed residents pay both halves themselves and report them to the IRS on Form 1040-SS, even when their income tax goes only to Hacienda.
What changes in 2026 and 2027
Act 38-2026, signed on 10 March 2026, rewrites the resident investor regime. Decree applications filed by 11:59 pm on 31 December 2026 keep the 0% rate on capital gains, interest and dividends, with decrees running to 2035. Applications from 1 January 2027 pay a fixed 4% on that income in exchange for a program extended to 2055. Applicants from 2027 must show six years without Puerto Rico residence before the move, and their home must be registered, or pending registration, in the Property Registry.
The 5% rate on gains built up before the move, available once ten years of residence have passed, now runs to the end of 2055 for decrees applied for from 2027, against the end of 2035 for current decrees. The general income tax table stays as it was for 2026. For tax year 2025 only, a one-off relief check funded with $554 million paid filers the difference between their 2025 tax and a lower revised table, plus an extra $2,500 exemption for each child under 18.
How the system works
- Tax system
- Worldwide (residence-based)
- Foreign income
- Taxed (worldwide)
- Taxes by citizenship
- No
- Exit tax
- No
- CFC rules
- No
- CRS
- Not participating
A special regime for new arrivals
Act 60 (Chapter 2 Individual Resident Investor and Chapter 3 Export Services), reformed by Act 38-2026.
Rates, brackets and rules checked November 2026.
Frequently asked
Is Puerto Rico tax free?
The first $9,000 of a resident's net taxable income is tax free, and the island taxes the rest at 7% to 33%. What residents escape is US federal income tax on Puerto Rico-source income, not income tax altogether.
How much income tax in Puerto Rico?
$5,555 is the table tax on $50,000 of net taxable income: $3,430 plus 25% of the $8,500 above $41,500. With gross income of $100,000 or less the bill is cut to 92%, or $5,110.60.
Do Puerto Rico residents pay federal income tax?
Federal income tax still applies to a bona fide resident's income from the mainland and from abroad, and to wages and pensions paid by the US government. Only Puerto Rico-source income is excluded.
Does Puerto Rico tax Social Security?
Federal Social Security benefits are not taxable in Puerto Rico and stay off the island return entirely. Employer pensions and purchased annuities are reported and taxed above their annual exclusion.
Does Puerto Rico tax pensions?
$11,000 of each pension is excluded every year, rising to $15,000 once the pensioner turns 60. The excess is taxed at the regular rates, and the exclusion applies to each pension separately.
Does Puerto Rico tax capital gains?
15% is the general rate on a resident's capital gains. For Act 60 investors, appreciation built up before the move is taxed under the regular rules when sold within ten years of becoming resident.
What are the Puerto Rico Act 60 residency requirements?
Bona fide residence and a home bought on the island within two years of the decree, confirmed in every annual report, apply to every Act 60 resident investor. Applicants filing by 31 December 2026 must not have lived in Puerto Rico between 17 January 2006 and 17 January 2012; from 2027 the test is six years without Puerto Rico residence before the move.
Ways to relocate to Puerto Rico
The residency and citizenship routes that lead here, weighed against the tax picture above.