How income tax works in Puerto Rico
Puerto Rico residents generally file Form 482 with Hacienda and report income from worldwide sources. The ordinary local table applies after exemptions, deductions, credits and other adjustments.
The 2025 Hacienda instructions show a regular individual table of 0%, 7%, 14%, 25% and 33%. Preferential categories such as long-term capital gains, eligible dividends and certain interest are computed separately.
Hacienda's 2026 relief resolution introduced a lower comparison schedule for eligible full-year 2025 residents with net taxable income of up to $150,000. It is a targeted relief calculation for 2025 returns, not a reason to present the old table as permanently repealed.
For U.S. federal income tax, a bona fide resident generally excludes Puerto Rico-source income under Section 933. U.S.-source income, U.S. government compensation and the year of moving can produce a federal filing obligation.
Social Security and Medicare taxes are a separate federal layer. Employees and self-employed people should model FICA or self-employment tax even when Puerto Rico-source income is excluded from federal income tax.
Regular individual table in the 2025 Hacienda instructions
| Bracket | Rate | Notes |
|---|---|---|
| Up to $9,000 | 0% | |
| $9,001 - $25,000 | 7% | 7% applies to the excess over $9,000. |
| $25,001 - $41,500 | 14% | Base tax of $1,120 plus 14% of the excess over $25,000. |
| $41,501 - $61,500 | 25% | Base tax of $3,430 plus 25% of the excess over $41,500. |
| Over $61,500 | 33% | Base tax of $8,430 plus 33% of the excess over $61,500. |
Tax rates at a glance
- Regular individual income tax
- 0% - 33%Progressive
- 2025 relief computation
- 0% - 29%
- Preferential income
- 4% / 10% / 15% / 20%
- Alternative basic tax
- May apply
- Social Security and Medicare
- Federal rules
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
EmployeesContractorsU.S. citizens moving to Puerto RicoRemote workersHigh earners with clean residence facts
Watch out for
- Do not confuse the Section 933 exclusion with the foreign earned income exclusion. Puerto Rico is a U.S. territory and uses its own source and bona fide-residence rules.
- The year you move to or from Puerto Rico is often the hardest year. Part-year residence, source allocation and Form 8898 can all matter.
- The alternative basic tax can apply to high-income individuals and preference items, so the ordinary bracket table is not always the final tax.
- FICA, IVU, property tax and municipal business taxes are not removed just because the federal income-tax result looks favorable.
Frequently asked questions
What is the income tax rate in Puerto Rico?
The regular individual table in the 2025 Hacienda instructions ranges from 0% to 33% of net taxable income. Credits, discounts, preferential rates and the 2026 relief resolution can change the final amount.
Do Puerto Rico residents pay federal income tax on their salary?
A bona fide resident generally excludes Puerto Rico-source salary from U.S. federal income tax under Section 933, except for special cases such as U.S. government compensation. Federal payroll taxes can still apply.
How do I become a bona fide resident of Puerto Rico?
The IRS generally looks at the presence test, whether your tax home is outside Puerto Rico and whether you have a closer connection to the United States or another country.