Puerto Rico Tax Rates
Puerto Rico is a US territory with its own tax system administered by the Departamento de Hacienda. While US citizens in Puerto Rico are generally exempt from federal income tax on Puerto Rican-source income, they are subject to Puerto Rico's own income tax with a top rate of 33%. Puerto Rico has attracted significant investment through Act 60 (formerly Acts 20 and 22), which offers generous tax incentives including a 4% corporate tax rate for qualifying export services businesses and exemption from taxes on capital gains for qualifying individual investors.
Top Income Tax Rate
33%
Corporate Tax Rate
18.5%
VAT / Sales Tax
11.5%
Capital Gains Tax
15%
Detailed Tax Information
Income Tax Brackets
Puerto Rico imposes a progressive income tax with brackets ranging from 0% to 33%. US citizens who are bona fide residents of Puerto Rico are generally exempt from US federal income tax on Puerto Rican-source income (but not on US-source or worldwide income from outside Puerto Rico). Non-resident US citizens working in Puerto Rico are subject to both PR and federal taxes with credits. Deductions include personal exemptions, dependent exemptions, and various itemized deductions. Act 60 Individual Investor incentives can exempt qualifying new residents from PR taxes on capital gains, interest, and dividends.
| Income Range | Tax Rate |
|---|---|
| $0 – $9K | 0% |
| $9K – $25K | 7% |
| $25K – $50K | 14% |
| $50K – $75K | 25% |
| $75K+ | 33% |
Corporate Tax
Puerto Rico imposes a corporate income tax consisting of a regular tax (graduated rates from 18.5% to 37.5%) and an alternative minimum tax. However, Act 60 Export Services incentives provide a flat 4% tax rate for qualifying businesses that export services from Puerto Rico. Qualifying activities include technology, consulting, financial services, and other export-oriented services. The 4% rate, combined with the exemption from US federal corporate tax on PR-source income, makes Puerto Rico highly competitive for service businesses targeting customers outside the island.
Standard Rate
18.5%
Small Business Rate
4%
Capital Gains Tax
Long-term capital gains (assets held more than 1 year) in Puerto Rico are taxed at 15%. Short-term gains are taxed as ordinary income at rates up to 33%. However, under Act 60 (Individual Investor) incentives, qualifying new residents can receive a 100% exemption from PR taxes on capital gains, interest, and dividends earned after establishing PR residency. This incentive has attracted numerous investors, crypto traders, and entrepreneurs to relocate to Puerto Rico.
Short-Term Rate
33%
Long-Term Rate
15%
Rate
15%
VAT / Sales Tax
Puerto Rico levies an 11.5% Sales and Use Tax (SUT/IVU), consisting of 10.5% state tax and 1% municipal tax. This applies to most goods and some services. Unprepared food, prescription medicines, and certain essential items are exempt. Puerto Rico considered converting the SUT to a full VAT but has not yet done so. B2B services are generally subject to the SUT unless specifically exempt.
Standard Rate
11.5%
Cryptocurrency Tax
Cryptocurrency in Puerto Rico is treated as property, similar to US federal treatment. Gains from crypto sales are subject to capital gains tax (15% long-term, up to 33% short-term). However, under Act 60 Individual Investor incentives, qualifying new Puerto Rico residents can receive a 100% exemption on capital gains realized after becoming bona fide PR residents. This has made Puerto Rico a popular destination for crypto investors. Gains accrued before relocating to PR are subject to a transitional 5% tax.
Tax Treaties
Puerto Rico does not have its own tax treaties as it is a US territory. US tax treaties apply to the extent they cover Puerto Rican situations, though bona fide PR residents are generally treated differently from US mainland residents under many treaty provisions. Puerto Rico has its own tax incentive programs (Act 60) that function as an alternative to treaty-based planning.
Treaty Network
0
Double taxation agreements
Key Details
Relocate to Puerto Rico
See how much you could save by moving here from your current country.
$-2,408
Tax in United States
$24K
24.4% effective
Tax in Puerto Rico
$27K
26.8% effective
Additional Cost
9.9%
more tax annually
US Citizens: Important Note
US citizens are taxed on worldwide income regardless of residence. You'll still need to file US taxes, though the Foreign Earned Income Exclusion and Foreign Tax Credit may reduce your liability.
