How income tax works in El Salvador
El Salvador income tax applies to Salvadoran-source income. Domiciled individuals are taxed progressively, while non-domiciled individuals are generally taxed at 30% on Salvadoran-source income. After the 2024 reform, foreign-source income is generally excluded from the concept of income, which is a major point for expats and cross-border investors.
{ "The current domiciled individual income tax bands are": "up to USD 6,600 exempt, USD 6,600 to USD 9,142.86 taxed at 10%, USD 9,142.86 to USD 22,857.14 taxed at 20%, and income above USD 22,857.14 taxed at 30%." }
Employers withhold monthly income tax from salaries using the payroll table, and annual income tax returns are generally due within four months after year-end, with payment due by 30 April. Employees below the filing threshold may be exempt from filing, but that does not remove payroll withholding or social security deductions.
Income tax brackets in El Salvador
| Bracket | Rate | Notes |
|---|---|---|
| USD 0 to USD 6,600 | 0% | Exempt band for domiciled individuals. |
| USD 6,600.01 to USD 9,142.86 | 10% | Applies only to the excess over the lower threshold. |
| USD 9,142.87 to USD 22,857.14 | 20% | Applies only to the excess over the lower threshold. |
| Above USD 22,857.14 | 30% | Top marginal rate for domiciled individuals. |
Tax rates at a glance
- Personal income tax
- 0% - 30%Progressive
- Foreign-source income
- 0%
- Non-domiciled rate
- 30%
- Salary withholding
- Monthly
- Return deadline
- 30 April
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
EmployeesExpatsFreelancersRemote workersCross-border investors
Watch out for
- El Salvador still taxes Salvadoran-source employment and business income, even when the payer is abroad. Source rules matter more than payment location.
- Social security and pension deductions can change take-home pay materially. ISSS is 3% for employees up to the USD 1,000 cap and AFP is 7.25%; employers have separate ISSS, AFP and, where applicable, INSAFORP obligations.
- Employees with salary income may be able to use the USD 1,600 standard deduction if their salary income stays within the threshold rules, but the deduction is already reflected through the withholding table.
- { "The filing and payment deadline is important": "annual income tax returns are generally due by 30 April, even where no balance is payable." }
Frequently asked questions
Do expats pay income tax in El Salvador?
Yes, if the income is Salvadoran-source. Non-domiciled individuals are generally taxed at 30% on Salvadoran-source income, but foreign-source income is generally excluded after the 2024 reform.
What is the highest income tax rate in El Salvador?
The top marginal personal income tax rate for domiciled individuals is 30%.
Is salary withholding monthly in El Salvador?
Yes. Employers withhold income tax from salary payments each month and remit the withheld amounts to the tax authorities.