Puerto Rico expat tax guide
Caribbean · how a foreigner who moves to Puerto Rico is taxed · 2026 · High-tax for movers
If you move to Puerto Rico, you become a tax resident when bona fide resident of Puerto Rico (presence + tax-home + closer-connection tests); Act 60 requires 183 days/yr. As a resident you are taxed on a worldwide basis — Puerto Rico residents are taxed by Puerto Rico on worldwide income (top rate 33%), but bona fide residents are exempt from US FEDERAL income tax on PR-source income; the Act 60 incentive can reduce PR tax on qualifying passive and export-service income to near zero. The top personal income tax rate is 33%. A foreign pension is treated as: Taxed as ordinary income under the PR Internal Revenue Code (regular brackets, top 33%), unless covered by an incentive decree. Puerto Rico also offers the Act 60 (formerly Acts 20/22) regime, which can sharply change this picture. It lacks a US tax treaty and lacks a US totalization agreement. Overall it reads as high-tax for movers for an inbound mover. General information, not tax advice — verify with Puerto Rico's tax authority.
Source: PwC Worldwide Tax Summaries. Data as of June 2026.
Puerto Rico expat tax at a glance
| Question | Puerto Rico (2026) |
|---|---|
| When you become tax resident | Bona fide resident of Puerto Rico (presence + tax-home + closer-connection tests); Act 60 requires 183 days/yr |
| Residency day-count trigger | 183 days |
| How residents are taxed | Worldwide — Puerto Rico residents are taxed by Puerto Rico on worldwide income (top rate 33%), but bona fide residents are exempt from US FEDERAL income tax on PR-source income; the Act 60 incentive can reduce PR tax on qualifying passive and export-service income to near zero. |
| Top personal income tax rate | 33% |
| Foreign pension treatment | Taxed as ordinary income under the PR Internal Revenue Code (regular brackets, top 33%), unless covered by an incentive decree |
| Foreign capital gains / dividends | Ordinarily taxed by PR; qualifying Act 60 Individual Investors pay 0% (decrees applied for before 2027) or 4% (later) on capital gains, dividends and interest accrued after becoming a resident |
| Special expat / non-dom / retiree regime | Act 60 (formerly Acts 20/22) |
| 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 Puerto Rico, 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 Puerto Rico
The first thing that matters is tax residency: bona fide resident of Puerto Rico (presence + tax-home + closer-connection tests); Act 60 requires 183 days/yr. 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, Puerto Rico taxes your worldwide income, so income earned abroad is in scope unless a treaty or special regime says otherwise. The top 33% rate only bites at the highest income band — an average earner pays less.
Foreign pensions and investments
Foreign pension: Taxed as ordinary income under the PR Internal Revenue Code (regular brackets, top 33%), unless covered by an incentive decree. Foreign capital gains and dividends: Ordinarily taxed by PR; qualifying Act 60 Individual Investors pay 0% (decrees applied for before 2027) or 4% (later) on capital gains, dividends and interest accrued after becoming a resident. These outcomes can be overridden by a double-tax treaty, which decides whether the source country or Puerto Rico taxes each stream — a key reason retirees should map their specific income against the relevant treaty.
The Act 60 (formerly Acts 20/22) regime
Act 60 consolidates the former Act 20 (Export Services) and Act 22 (Individual Investors): export-services businesses get a 4% corporate income tax; qualifying Individual Investors who become bona fide PR residents pay 0% on PR-sourced capital gains, dividends and interest. A law signed Mar 2026 raises the investor passive-income rate to 4% for later applications and extended the programme to 2055.
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 Puerto Rico's tax authority before relying on it.
US citizens and social security in Puerto Rico
| Question | Puerto Rico |
|---|---|
| US income tax treaty? | No |
| US social-security totalization agreement? | No |
| Tax basis for residents | Worldwide |
| Top personal income tax | 33% |
There is no US tax treaty with Puerto Rico, 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 Puerto Rico. See our guides on FEIE vs the Foreign Tax Credit and totalization agreements.
Countries with a similar expat-tax profile to Puerto Rico
| Country | Tax basis | Top income tax | Special regime |
|---|---|---|---|
| Puerto Rico (this country) | Worldwide | 33% | Act 60 (formerly Acts 20/22) |
| Croatia | Worldwide | 33% | Returning-emigrant 5-year exemption |
| Poland | Worldwide | 32% | Ulga na powrot + lump-sum option |
| Estonia | Worldwide | 22% | None |
| Czech Republic | Worldwide | 23% | None |
| United Kingdom | Mixed | 45% | 4-year Foreign Income and Gains (FIG) regime |
Frequently asked questions
When do you become a tax resident of Puerto Rico?
Bona fide resident of Puerto Rico (presence + tax-home + closer-connection tests); Act 60 requires 183 days/yr. The headline trigger is 183 days. Once resident, Puerto Rico taxes you on your worldwide income. This is general information for 2026, not tax advice — verify with the official authority.
How does Puerto Rico tax a foreign pension?
Taxed as ordinary income under the PR Internal Revenue Code (regular brackets, top 33%), unless covered by an incentive decree. 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 Act 60 (formerly Acts 20/22) regime in Puerto Rico?
Act 60 consolidates the former Act 20 (Export Services) and Act 22 (Individual Investors): export-services businesses get a 4% corporate income tax; qualifying Individual Investors who become bona fide PR residents pay 0% on PR-sourced capital gains, dividends and interest. A law signed Mar 2026 raises the investor passive-income rate to 4% for later applications and extended the programme to 2055. It is a headline summary for 2026; conditions and sunset dates change, so verify the current rules with Puerto Rico's tax authority.
Is Puerto Rico good for US citizens or retirees?
Puerto Rico 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 Puerto Rico compiled from its primary source, cross-checked with PwC Worldwide Tax Summaries, the OECD, the IRS US-treaty list and the SSA totalization list. US territory — no income tax treaty needed (false = not applicable). Covered by US Social Security, so no totalization agreement applies. PR residents file PR returns; US citizens still file a US federal return but bona fide residents exclude PR-source income. Top 33% rate begins above about USD 61,500. 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 Puerto Rico's official tax authority and a qualified cross-border adviser before acting. See our methodology and disclaimer.
Last updated: 2026-06-21