Panama expat tax guide
North America · how a foreigner who moves to Panama is taxed · 2026 · Expat-friendly
If you move to Panama, you become a tax resident when tax resident if present in Panama over 183 days/year and earning local income. As a resident you are taxed on a territorial basis — A new resident is taxed only on Panama-source income; all foreign-source income is exempt even if remitted to Panama. The top personal income tax rate is 25%. A foreign pension is treated as: Exempt — foreign pensions are foreign-source and outside Panama's tax. Panama also offers the Pensionado retiree visa (not a tax regime) regime, which can sharply change this picture. It lacks a US tax treaty and lacks a US totalization agreement. Overall it reads as expat-friendly for an inbound mover. General information, not tax advice — verify with Panama's tax authority.
Source: PwC Worldwide Tax Summaries. Data as of June 2026.
Panama expat tax at a glance
| Question | Panama (2026) |
|---|---|
| When you become tax resident | Tax resident if present in Panama over 183 days/year and earning local income |
| Residency day-count trigger | 183 days |
| How residents are taxed | Territorial — A new resident is taxed only on Panama-source income; all foreign-source income is exempt even if remitted to Panama. |
| Top personal income tax rate | 25% |
| Foreign pension treatment | Exempt — foreign pensions are foreign-source and outside Panama's tax |
| Foreign capital gains / dividends | Exempt — foreign capital gains and dividends are not Panama-source, so not taxed |
| Special expat / non-dom / retiree regime | Pensionado retiree visa (not a tax regime) |
| US income tax treaty | No |
| US social-security totalization | No |
Source: PwC Worldwide Tax Summaries. Data as of June 2026.
Compiled from the primary source for Panama, cross-checked against PwC Worldwide Tax Summaries, the OECD, the IRS US-treaty list and the SSA totalization list. Rules change — confirm with the official tax authority. This is not tax advice.
What this means if you relocate to Panama
The first thing that matters is tax residency: tax resident if present in Panama over 183 days/year and earning local income. The 183-day line is the headline trigger, but a home, family or business ties can make you resident sooner — so counting days alone is risky.
Once resident, Panama largely leaves foreign income alone (territorial basis), which is why it appears on lists of friendly destinations for expats and remote workers. The top 25% rate only bites at the highest income band — an average earner pays less.
Foreign pensions and investments
Foreign pension: Exempt — foreign pensions are foreign-source and outside Panama's tax. Foreign capital gains and dividends: Exempt — foreign capital gains and dividends are not Panama-source, so not taxed. These outcomes can be overridden by a double-tax treaty, which decides whether the source country or Panama taxes each stream — a key reason retirees should map their specific income against the relevant treaty.
The Pensionado retiree visa (not a tax regime) regime
The Pensionado visa grants permanent residency with legally mandated 15-25% discounts on medicines, healthcare, restaurants, transport and utilities; it is a residency/benefits programme, not a tax break — the foreign-income exemption comes from Panama's territorial system, not the visa.
Special regimes have eligibility tests, time limits and sunset dates that change frequently. Treat the summary above as a starting point and verify the current terms with Panama's tax authority before relying on it.
US citizens and social security in Panama
| Question | Panama |
|---|---|
| US income tax treaty? | No |
| US social-security totalization agreement? | No |
| Tax basis for residents | Territorial |
| Top personal income tax | 25% |
There is no US tax treaty with Panama, so US citizens rely on the Foreign Tax Credit (and the Foreign Earned Income Exclusion) under US domestic law to soften double taxation. With no totalization agreement, you can be exposed to social-security-type charges in both the US and Panama. See our guides on FEIE vs the Foreign Tax Credit and totalization agreements.
Countries with a similar expat-tax profile to Panama
| Country | Tax basis | Top income tax | Special regime |
|---|---|---|---|
| Panama (this country) | Territorial | 25% | Pensionado retiree visa (not a tax regime) |
| Costa Rica | Territorial | 25% | Pensionado / Rentista visas (not a tax regime) |
| Belize | Territorial | 25% | QRP (Qualified Retired Persons) |
| Malaysia | Territorial | 30% | Malaysia My Second Home (MM2H) |
| Singapore | Territorial | 24% | None |
| Hong Kong | Territorial | 17% | None |
Frequently asked questions
When do you become a tax resident of Panama?
Tax resident if present in Panama over 183 days/year and earning local income. The headline trigger is 183 days. Once resident, Panama taxes you on local-source income only (foreign income is generally outside scope). This is general information for 2026, not tax advice — verify with the official authority.
How does Panama tax a foreign pension?
Exempt — foreign pensions are foreign-source and outside Panama's tax. Tax treaties can reassign who taxes a pension, so the outcome depends on your nationality and the source country. Confirm with a cross-border adviser before relying on this.
What is the Pensionado retiree visa (not a tax regime) regime in Panama?
The Pensionado visa grants permanent residency with legally mandated 15-25% discounts on medicines, healthcare, restaurants, transport and utilities; it is a residency/benefits programme, not a tax break — the foreign-income exemption comes from Panama's territorial system, not the visa. It is a headline summary for 2026; conditions and sunset dates change, so verify the current rules with Panama's tax authority.
Is Panama good for US citizens or retirees?
Panama does not have a US income tax treaty and does not have a US social-security totalization agreement. Without a totalization agreement, you can owe social-security-type contributions in both the US and here. US citizens are taxed on worldwide income wherever they live, but the Foreign Earned Income Exclusion and Foreign Tax Credit usually prevent double income tax. Not tax advice.
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Sources & accuracy
Profile for Panama compiled from its primary source, cross-checked with PwC Worldwide Tax Summaries, the OECD, the IRS US-treaty list and the SSA totalization list. Territorial PIT brackets: 0% to USD 11,000; 15% on 11,000-50,000; 25% above 50,000. No US tax treaty; no totalization agreement. Data as of June 2026 (2026 position). This page is general information, not tax advice — tax residency and special regimes are fact-specific and change often, so verify with Panama's official tax authority and a qualified cross-border adviser before acting. See our methodology and disclaimer.
Last updated: 2026-06-21