Panama Personal Income Tax
Detailed personal income tax rates and rules for Panama in 2026.
Panama imposes a progressive personal income tax on income sourced within Panama only (territorial system). The first USD 11,000 is exempt. Income from USD 11,000 to USD 50,000 is taxed at 15%, and income above USD 50,000 is taxed at 25%. Foreign-source income is completely exempt from Panamanian taxation, regardless of whether it is remitted to Panama. Employment income is subject to withholding by employers. Self-employed individuals and professionals must file annual returns. Deductions include mortgage interest, medical expenses, donations, and social security contributions.
| Income Range (USD) | Tax Rate |
|---|---|
| $0 – $11K | 0% |
| $11K – $50K | 15% |
| $50K+ | 25% |
Filing Deadline
March 15
Residency Rule
Panama considers individuals as tax residents if they spend more than 183 days in Panama during a calendar year or if they have established their permanent home in Panama. Under the territorial tax system, even residents are only taxed on Panamanian-source income. Foreign-source income is exempt regardless of residency status.
How Panama Income Tax compares
Panama’s top personal income tax rate of 25% is the 118th highest of 203 countries TaxAtlas tracks, below the global average of 27.7% and North America’s regional average of 24.4%.
