Puerto Rico Act 60 Tax Calculator 2026 โ Investor & Export Services
Calculate PR Act 60 tax savings: 0% on capital gains/dividends, 4% corporate rate on export services. Multi-year break-even analysis with moving costs, donation requirements, and US vs PR tax comparison.
Investor: 0% on PR-source gains. Export: 4% on qualifying service income
183+ days required for bona fide residency
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Total income (W-2, business, etc.) before qualifying items $
LTCG, dividends, interest โ these become 0% in PR under Chapter 2 $
Qualifying services exported outside PR โ taxed at 4% Your ordinary income marginal federal rate
Income examples:
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Annual Tax Savings
$0
US Baseline Tax
$0
PR Act 60 Tax
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Residency Status
Act 60 Tax Analysis
How Puerto Rico Act 60 Works
Act 60 is one of the most powerful US tax incentives available to US citizens. Puerto Rico, as a US territory, has its own tax system. Bona fide PR residents exclude PR-source income from US federal tax under IRC ยง933. PR then taxes qualifying income at preferential rates under Act 60.
Chapter 2 โ Individual Investor Formula
Qualifying PR-source income: LTCG, dividends, interest (post-residency)
PR Tax Rate: 0% (zero)
US Federal Tax: Excluded under IRC ยง933
Annual Donation Required: $10,000 to PR nonprofits
Residency Requirement: 183+ days in PR per year
Net Savings = US Tax Rate ร Qualifying Income (approx.)
Chapter 3 โ Export Services Formula
Qualifying Services: Exported outside PR (consulting, software, finance, etc.)
PR Corporate Tax Rate: 4% (flat)
US Rate Avoided: 21% corporate + distribution tax
Effective Savings = (Normal Rate โ 4%) ร Qualifying Income
Example: $1M in capital gains
Without PR residency: $1M LTCG taxed at 23.8% (20% + 3.8% NIIT) = $238,000 federal tax
With PR Act 60 (Chapter 2): $1M LTCG โ PR-source โ 0% PR tax, excluded from federal
Annual savings: ~$238,000 minus $10,000 donation = ~$228,000 net annual benefit
With PR Act 60 (Chapter 2): $1M LTCG โ PR-source โ 0% PR tax, excluded from federal
Annual savings: ~$238,000 minus $10,000 donation = ~$228,000 net annual benefit
Extended
Multi-Year Break-Even Simulator
Year-by-year cumulative savings vs US baseline with setup costs, donation requirements, and CPA fees
Enter one-time setup costs to find your break-even year and cumulative savings over time.
$
Legal fees, CPA, relocation, filing fees ($30Kโ$50K typical) $
Minimum $10,000/year required under Act 60 Chapter 2 $
PR tax return, US return, compliance documentation Cumulative Savings (Act 60)
Setup + Ongoing Costs
Detailed year-by-year comparison showing US baseline tax vs PR Act 60 net cost.
| Year | US Baseline Tax | PR Act 60 Tax | Annual Costs | Net Savings | Cumulative Savings |
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Frequently Asked Questions
What is Puerto Rico Act 60 and who qualifies?
Puerto Rico Act 60 (2019) consolidated Acts 20 and 22. It provides two major incentives: the Individual Investors chapter (Chapter 2) offers 0% tax on Puerto Rico-source interest, dividends, and long-term capital gains for qualifying new residents. The Export Services chapter (Chapter 3) provides a 4% flat corporate income tax on qualifying export services businesses. To qualify, you must become a bona fide resident of Puerto Rico โ generally 183+ days per year โ and cannot have been a PR resident in the 10 years before applying. A $10,000 annual donation to PR non-profits is also required for investors.
How does the 0% capital gains rate work under Act 60?
Under Act 60 Chapter 2, new PR residents pay 0% on long-term capital gains from Puerto Rico-source assets appreciated AFTER establishing residency. Capital gains on assets you owned before moving to PR are taxed differently: the appreciation up to the date you became a resident is still subject to US federal tax (you pay a 5% exit tax to the US on pre-move gains above $2M); appreciation after becoming a resident is PR-source and 0%. This is why many investors establish PR residency before major liquidity events like IPOs or company sales.
What is the $10,000 annual donation requirement?
Act 60 Individual Investors (Chapter 2) must donate at least $10,000 per year to Puerto Rico non-profit organizations. At least $5,000 must go to non-profits in Puerto Rico. This is a relatively small requirement compared to the potential tax savings. The donations are also deductible on your Puerto Rico income tax return, slightly offsetting the cost. Failure to make the donation can jeopardize your decree.
Do I still pay US federal income tax as a PR resident?
US citizens who become bona fide PR residents are still US citizens and must file US federal tax returns. However, bona fide PR residents exclude their Puerto Rico-source income from US federal tax under IRC Section 933. This is the key mechanism โ PR-source income (capital gains from PR assets, dividends from PR corporations) is excluded from US federal taxable income. Income from US-source still faces US federal tax. This is why Act 60 works: capital gains from PR-source assets or from businesses established in PR after your move are excluded from federal tax and taxed at 0% in PR.
What are the practical costs of moving to Puerto Rico for Act 60?
Initial setup costs typically run $30,000โ$50,000, including: legal fees for Act 60 decree application ($5,000โ$15,000), CPA fees for complex tax planning ($5,000โ$15,000), relocation costs, and filing fees ($5,000 to the PR government). Ongoing costs include: $10,000 annual donation requirement, higher cost of goods (PR prices are higher than the mainland), and annual compliance costs (PR tax returns, maintaining residency documentation). These costs must be weighed against the tax savings โ generally the strategy makes sense for investors with $500K+ in expected annual capital gains or dividends.