Puerto Rico Taxes: The Rates Residents Actually Pay (2026)

Last verified: July 6, 2026

Puerto Rico runs its own complete tax system, separate from the IRS: a progressive income tax topping out at 33%, an 11.5% sales and use tax, a 15% rate on long-term capital gains, municipal property taxes, and the same federal payroll taxes as the mainland. What most residents don't pay is federal income tax on island-source income — that question has its own full explainer.

This page covers the system itself: every major tax, the actual 2026 rates, who collects them, and where Act 60 decrees change the picture.

What is Puerto Rico's income tax rate?

Puerto Rico's individual income tax, administered by the Departamento de Hacienda, uses five brackets: 0% on the first $9,000 of net taxable income, 7% from $9,000 to $25,000, 14% from $25,000 to $41,500, 25% from $41,500 to $61,500, and 33% on everything above $61,500.

Notice where that top bracket starts. A salaried professional earning $100,000 in San Juan hits the 33% marginal rate at an income level where most U.S. states would be charging single digits. High earners also face a gradual adjustment: an additional 5% tax on net taxable income above $500,000, plus an alternate basic tax computation that backstops the regular system.

One development worth watching: a pending legislative proposal, Senate Bill 912, would raise the 33% threshold from $61,500 to $150,000 to close the gap with federal rate structures. As of this writing it has not become law — the brackets above remain current.

What is Puerto Rico's sales tax?

The sales and use tax — locally the IVU (Impuesto sobre Ventas y Uso) — is 11.5%: 10.5% to the central government and 1% to the municipality. That's one of the highest sales tax rates anywhere in the United States. Unprepared food and prescription medicines are exempt, and a reduced 4% rate applies to certain business-to-business and designated professional services.

How are capital gains and investment income taxed?

For ordinary residents, long-term capital gains (assets held over a year) are taxed at 15%; short-term gains are taxed as regular income at rates up to 33%.

This is the layer where Act 60 rewrites the math. A Resident Individual Investor decree replaces those rates on post-residency interest, dividends, and capital gains with 0% for applications filed by December 31, 2026, or 4% for applications filed after — and because the federal side is already excluded for bona fide residents, the decree rate is the whole tax bill on qualifying income. The deadline mechanics are covered in our full breakdown of the December 31, 2026 cutoff.

What about property taxes?

Property taxes fund Puerto Rico's 78 municipalities and are collected by CRIM (Centro de Recaudación de Ingresos Municipales), not Hacienda. Rates vary by municipality, but the system has a famous quirk: assessments are still based on 1950s-era property valuations, which means the taxable value of a home is typically a small fraction of its market price. Primary residences also receive an exoneration on the first portion of assessed value, so many owner-occupied homes pay modest or no property tax. Buyers of high-end property should still model CRIM obligations — new construction and luxury segments are where the bills get real.

What do businesses pay?

Under the regular (non-incentive) system, corporate income tax starts at 18.5% and, with the graduated surtax, reaches an effective 37.5% for the largest companies. Municipalities add a license tax (patente) on gross receipts.

That regular system is precisely why Act 60 decrees matter to businesses: a qualifying export services company operates at a 4% corporate rate instead, with exemptions on distributions. The gap between 37.5% and 4% is the island's core economic development bet.

What about federal taxes?

Everyone in Puerto Rico pays federal payroll taxes — Social Security, Medicare, self-employment tax — at mainland rates, and federal income tax applies to U.S.-source income. The one big federal absence is income tax on Puerto Rico-source income for bona fide residents, under IRC Section 933. The full yes-and-no is in Do Puerto Ricans Pay US Taxes?

How does Puerto Rico compare to a U.S. state?

Honestly: for an ordinary wage earner, Puerto Rico is not a low-tax jurisdiction. A 33% marginal rate arriving at $61,500, an 11.5% sales tax, and full payroll taxes add up to a heavier burden than most states impose on the same salary. The island's tax advantage is real but specific: it belongs to bona fide residents whose income is island-source and, above all, to Act 60 decree holders — investors and export businesses whose qualifying income moves from these regular rates to 0%–4%. Understanding which regular rates a decree replaces is the first step in valuing one; the residency rules that make any of it work are the second.

Frequently Asked Questions

What is the income tax rate in Puerto Rico?
Puerto Rico's individual income tax ranges from 0% to 33%, with the top rate applying to net taxable income above $61,500. Income over $500,000 faces an additional 5% gradual adjustment tax.

What is Puerto Rico's sales tax rate?
11.5% — 10.5% state plus 1% municipal. Unprepared food and prescription medicines are exempt; certain B2B services pay a reduced 4%.

How much is capital gains tax in Puerto Rico?
15% on long-term gains for ordinary residents; short-term gains are taxed as ordinary income up to 33%. Act 60 Resident Individual Investor decree holders pay 0% (applications filed by December 31, 2026) or 4% (filed later) on qualifying post-residency gains.

Does Puerto Rico have property taxes?
Yes, collected by CRIM for the municipalities. Assessments rest on 1950s-era valuations, and primary residences receive a partial exoneration, so effective bills are often low relative to market values.

What is the corporate tax rate in Puerto Rico?
The regular system runs from 18.5% to an effective 37.5% with surtax. Act 60 export services businesses pay 4% instead.

Is Puerto Rico a low-tax place to live?
Not for ordinary wage earners — the 33% bracket starts at $61,500 and sales tax is 11.5%. The major advantages accrue to bona fide residents with island-source income and, especially, Act 60 decree holders.

Who collects taxes in Puerto Rico?
The Departamento de Hacienda administers income and sales taxes; CRIM collects municipal property taxes; the IRS collects federal payroll taxes and tax on U.S.-source income.

Could Puerto Rico's tax rates change soon?
Possibly. Senate Bill 912, pending as of mid-2026, proposes raising the 33% bracket threshold from $61,500 to $150,000. It has not become law.

Trying to figure out which of these rates would actually apply to you? Schedule a consultation — we'll connect you with the CPAs and attorneys who can map your income against Puerto Rico's regular system and the Act 60 alternatives.

This article is general information, not tax or legal advice. Rates and thresholds change; verify your specific situation with qualified advisors.