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Puerto Rico Act 60 Tax Estimator

Calculate whether relocating to Puerto Rico under Act 60 makes financial sense for your situation. Compare your current tax burden to Act 60 benefits — including the break-even point.

Your Financial Profile

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Salary and other income taxed at ordinary rates, earned in Puerto Rico after the move. Puerto Rico taxes it at its regular graduated rates (up to 33%); Act 60 rates do not apply to it

$

Expected yearly gains on investments bought after you move to PR. Include growth on assets you owned before the move only if you will elect to treat it as Puerto Rico income (Treas. Reg. 1.937-2(f)(1)(vi))

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Unrealized gains on investments held BEFORE the move — still subject to federal tax

$

Income from services exported to clients outside Puerto Rico (4% Act 60 rate)

Your current state's income tax is worked out on its own brackets (the top rate is shown for reference)

A 2026 Puerto Rico law (Act 38-2026) sets the rate by application date. Applying from 2027 also needs six years of living outside Puerto Rico before the move.

Net Annual Benefit

+$53,069

Estimated annual tax savings compared to your current situation

Without Act 60

Total Annual Tax

$137,900

With Act 60

Total Annual Tax + Costs

$84,831

Break-Even Capital Gains

$87,379

Annual post-move capital gains at which the move breaks even: below it, Puerto Rico tax on your wages, compliance costs and the donation outweigh the tax saved

Tax Breakdown Under Act 60

Post-move capital gains tax$12,000 (4%)
Puerto Rico tax on wages (graduated rates)$50,331
Pre-move gains tax (federal)$0
Export services tax (4%)$0
Annual compliance costs (estimate)$7,500
Annual report fee (set by law)$5,000
Annual charitable donation$10,000
State tax savings+$44,766
Effective tax rate17.0%

What Act 60 Does NOT Do

  • Exempt pre-move capital gains from federal tax. Gains on assets acquired before your move are still taxed at federal rates.
  • Take you out of the US federal system. You still file a US federal return for any income from US sources, including pre-move gains; only someone whose income is all from Puerto Rico sources has no federal return to file (IRS Publication 570).
  • Give your salary a special rate. Wages a bona fide resident earns for work done in Puerto Rico are already excluded from US federal income tax, whoever the employer is (US government employees excepted), but Puerto Rico taxes them at its own graduated rates. Only export services income and post-move capital gains receive Act 60 rates.
  • Work without compliance. You must file an annual report (with a $5,000 fee), donate at least $10,000 to PR nonprofits every year, and maintain bona fide PR residency.

Compliance Requirements

Act 60 requires bona fide PR residency (183+ days/year), an annual report filing, and a charitable donation of at least $10,000 to Puerto Rico nonprofits every year. Filing the annual report carries a $5,000 fee set by law, and legal and accounting costs are estimated at a further $5,000-$10,000 a year. Failure to maintain compliance can result in revocation of your decree and back taxes.

Analysis

  • 1Act 60 shows significant tax savings for your profile. The net benefit exceeds $50,000 annually — this is a strong candidate for relocation.
  • 2Puerto Rico taxes your wages of $200,000 at its regular graduated rates (about $50,331 a year). Act 60 rates apply only to export services income and the investor decree's interest, dividends and gains.
  • 3Decrees applied for from 1 January 2027 pay 4% on post-move gains, interest and dividends (until 2055), and need six years of living outside Puerto Rico before the move. Decrees applied for by 31 December 2026 pay 0%, but only until 2035.
  • 4On these figures the move breaks even at about $87,379 of post-move capital gains a year: below that, Puerto Rico tax on your wages, the compliance costs and the donation outweigh the tax saved.
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Last updated: October 2026Calculator methodologyReport an error

This calculator is for educational purposes only and does not constitute financial advice. This calculator provides estimates based on simplified Act 60-2019 rules and 2026 federal tax rates. It does not account for all deductions, credits, Puerto Rico local taxes, or individual circumstances. Act 60 eligibility requires meeting specific residency, reporting, and compliance requirements. Consult a qualified tax professional with Act 60 experience before making relocation decisions. Post-move gains are taxed at 0% for decrees applied for by 31 December 2026 and 4% from 2027 (Act 38-2026); see the methodology for details. Full disclaimer →

Puerto Rico Act 60: The Complete Guide

Puerto Rico Act 60-2019 (which consolidated the former Act 20 and Act 22) offers some of the most attractive tax incentives available to US citizens — without requiring a passport, visa, or citizenship change. As a US territory, Puerto Rico allows Americans to relocate and establish residency without any immigration complexity.

The headline benefit: a low fixed Puerto Rico rate on capital gains earned after becoming a bona fide PR resident: 0% for decrees applied for before 2027, and 4% for decrees applied for from 1 January 2027. For investors, traders, and entrepreneurs with significant capital gains, this can represent hundreds of thousands of dollars in annual tax savings.

How Act 60 Works: The Two Main Incentives

Individual Investor Incentive (formerly Act 22)

The Individual Investor Incentive taxes the capital gains that build up after you become a bona fide Puerto Rico resident, on assets you already owned and on new ones, at a low fixed rate, which depends on when you apply for your decree. Applied for by 31 December 2026: 0%, for gains realized before 2036. Applied for from 1 January 2027: 4%, for gains realized before 2056 (Act 38-2026, signed 10 March 2026). This includes:

  • Stock and securities gains
  • Cryptocurrency gains
  • Real estate gains (on PR property acquired post-move)
  • Business sale proceeds (for businesses established post-move)

Critical distinction: Puerto Rico's low rate does not switch off US federal tax. Gains that built up before the move are still subject to federal capital gains tax. On assets you owned before moving and sell within 10 years, the IRS treats the whole gain as US income unless you elect to treat the part that built up while you lived in Puerto Rico as Puerto Rico income (Treas. Reg. 1.937-2(f)(1)(vi)). This makes timing and asset planning essential.

Export Services Incentive (formerly Act 20)

The Export Services Incentive offers a 4% flat tax rate on income from services provided to clients located outside Puerto Rico. Qualifying services include:

  • Consulting and professional services
  • Software development and technology services
  • Financial services and trading
  • Creative and marketing services
  • Research and development

The key requirement: the services must be “exported” — meaning performed in PR for clients/customers located outside PR. If your clients are in the US mainland, your services qualify. At 4%, this rate is dramatically below the 24-37% federal rates most service professionals pay.

Eligibility Requirements

Qualifying for Act 60 requires more than just moving to Puerto Rico. The requirements include:

  • Bona fide PR residency: You must spend 183 or more days per year in Puerto Rico and establish PR as your tax home. This is verified through a combination of physical presence, economic ties, social connections, and the “closer connection” test.
  • No prior PR residency: You must not have been a Puerto Rico resident between 17 January 2006 and 17 January 2012. If you apply after 31 December 2026, you must also show you lived outside Puerto Rico for at least the six years before your move.
  • Decree application: You must apply for and receive an Act 60 decree from the Puerto Rico Department of Economic Development and Commerce (DDEC). The application process typically takes 60-120 days and requires legal assistance.
  • Charitable donation: at least $10,000 every year to Puerto Rico nonprofits, $5,000 of it to organisations fighting child poverty (DDEC Circular Letter 2026-001).
  • Home purchase: Within two years of the decree you must buy a home in PR as your main residence. For decrees applied for from 2027, it must be registered in your name in the Puerto Rico Property Registry.
  • Annual compliance report: Filed with DDEC each year to maintain active decree status. Filing it carries a $5,000 fee every year, set by law (Incentives Code §6020.10(d)).

What Act 60 Does NOT Do

Understanding the limitations of Act 60 is just as important as understanding its benefits. Act 60 does NOT:

  • Exempt pre-move capital gains. If you hold $1 million in unrealized gains on stocks purchased before your move, those gains are still taxed at federal rates (0%, 15%, or 20% plus NIIT) when you realize them — even if you have an Act 60 decree. The IRS tracks your cost basis and acquisition dates.
  • Take you out of the US federal system. You still file IRS Form 1040 for any year with income from US sources, including gains that built up before the move; only someone whose income is all from Puerto Rico sources has no federal return to file (IRS Publication 570). Act 60 benefits flow through your Puerto Rico return.
  • Give your salary a special rate. The Act 60 resident investor decree does not cover wages. Under IRC section 933, wages a bona fide resident earns for work done in Puerto Rico are Puerto Rico-source income and are excluded from US federal income tax, whoever the employer is (IRS Pub 570 sources wages by where the work is performed). The exception is US government employees. Puerto Rico taxes those wages at its own graduated rates, not at the investor rate (separate Act 60 programmes give narrow wage breaks, such as for hard-to-recruit professionals on pay above $100,000).
  • Guarantee the incentive forever. The investor rate has an end date: 2035 for decrees applied for by 31 December 2026, 2055 for later ones. The 2026 law kept existing decrees on their terms.

The Break-Even Calculation: When Act 60 Makes Sense

Act 60 has real costs: the $5,000 annual report fee, legal and accounting costs (we assume $5,000-$10,000/year), charitable donations (at least $10,000/year), buying a home, and the lifestyle adjustment of relocating to an island. The question is whether the tax savings exceed these costs.

The break-even point is the amount of post-move capital gains a year at which the move pays for itself. The calculator finds it by running the whole comparison, because several things move it at once: the federal tax the gains would carry if you stayed (the 0%, 15% and 20% bands, plus the 3.8% NIIT above $200,000 of income), your state's tax on them, the Puerto Rico rate on them, and about $22,500 a year of fixed costs ($7,500 of legal and accounting costs, the $5,000 annual report fee and the $10,000 donation). If you have a salary, Puerto Rico's own graduated tax on it counts too, and it can be higher or lower than the federal and state tax you pay on it now.

Some examples for a single filer applying for a decree from 2027 (4% in Puerto Rico), on the calculator's 2026 figures:

  • California resident with no other income: about $177,000 of post-move gains a year.
  • Texas resident with no other income: about $270,000. The first $65,550 of gains (the $16,100 standard deduction plus the $49,450 0% band) would carry no federal tax if you stayed, so there is less to save.
  • California resident with $250,000 of wages: about $73,000. On top of a salary, each dollar of gain would carry 15% federal tax, the 3.8% NIIT and 9.3% California tax if you stayed.

The message is clear: Act 60 is most powerful for people in high-tax states with significant capital gains income.

Pre-Move Planning: Maximizing Act 60 Benefits

  • Realize gains before moving? In some cases, it makes sense to realize pre-move gains before relocating — at your current federal rate — to “reset” your cost basis. Post-move, you rebuild positions with a new cost basis and future gains qualify for the decree rate. This is highly situation-specific and requires careful tax modeling.
  • Timing matters. The acquisition date of assets determines whether gains are pre-move or post-move. Assets purchased after you become a resident qualify for the decree rate (0% or 4%, depending on when you applied).
  • State exit planning. If you are currently in a state with aggressive exit auditing (California, New York), plan your state departure carefully. Sever all ties to your former state before or concurrent with your PR move.
  • Business restructuring. If you run a service business, restructuring to qualify for the Export Services Incentive (4% rate) can multiply your savings. Your business must be based in PR and serve clients outside PR.

Living in Puerto Rico: The Lifestyle Factor

Tax savings are only part of the equation. PR is a US territory — you can keep your US passport, use US mail, shop on Amazon, and access federal programs. English is widely spoken alongside Spanish. The island has modern infrastructure, an international airport (SJU), and a growing expat community in areas like Dorado, Condado, and Palmas del Mar.

Challenges to consider:

  • Cost of living: While cheaper than NYC or SF, Puerto Rico is not as affordable as many assume. Import costs make groceries and consumer goods 10-20% more expensive than the US mainland average. Housing in desirable areas has risen significantly since the Act 60 influx.
  • Infrastructure: Power grid reliability has improved since Hurricane Maria but remains a concern. Many Act 60 residents invest in solar + battery backup systems.
  • Healthcare: Modern hospitals exist in the San Juan metro area, but specialist availability can be limited. Many residents maintain US mainland healthcare relationships for complex procedures.
  • 183-day requirement: You must physically be in PR for more than half the year. This limits travel flexibility and requires genuine commitment to island life, not just a mailbox address.

Recent Changes and Future of Act 60

Act 60 has faced increasing political scrutiny. In recent years:

  • Act 38-2026 (signed 10 March 2026) extended the investor incentive to 2055 but replaced the 0% rate with 4% for decrees applied for from 1 January 2027, and added a six-year look-back on prior Puerto Rico residence. Decrees applied for by 31 December 2026 keep 0% until 2035.
  • The minimum charitable donation was increased, and enforcement of compliance has tightened.
  • DDEC has become more thorough in reviewing applications and verifying residency claims.
  • Congressional proposals have been introduced (though not passed) to eliminate or limit Act 60 benefits, so future changes are possible.

For anyone considering Act 60, the advice is consistent: work with a qualified tax professional who specializes in Puerto Rico tax incentives, run the numbers carefully, and make sure the lifestyle fits before committing.

Frequently Asked Questions

What is Puerto Rico Act 60?

Act 60-2019 consolidated the former Acts 20 and 22. It taxes post-move capital gains at 0% (decrees applied for by 31 December 2026, until 2035) or 4% (applied for from 2027, until 2055), and qualifying export services income at 4%, for individuals and businesses that establish bona fide residency in Puerto Rico.

Do I need a visa to move to Puerto Rico?

No. Puerto Rico is a US territory. US citizens can move freely between the mainland and PR without any visa, passport, or immigration paperwork. You simply establish residency.

Are pre-move capital gains tax-free under Act 60?

No. Only appreciation that builds up after you become a bona fide PR resident qualifies for the Act 60 rate (0% for decrees applied for before 2027, 4% for decrees applied for from 1 January 2027). Pre-move gains are still subject to federal capital gains tax at the applicable rate (0%, 15%, or 20% plus 3.8% NIIT if applicable). For assets you already owned when you moved and sell within 10 years, the IRS treats the whole gain as US income unless you elect to treat the part that built up while you lived in Puerto Rico as Puerto Rico income (Treas. Reg. 1.937-2(f)(1)(vi)). For listed securities that part is measured from their market value when you moved; for other assets the gain is split by days held.

How much does Act 60 compliance cost per year?

Filing the annual report with DDEC carries a $5,000 fee every year, set by law (Incentives Code §6020.10(d)). On top of that, legal and accounting fees and ongoing record-keeping for the dual tax system typically run to $5,000-$10,000 a year; the calculator assumes $7,500. Neither includes the charitable donation of at least $10,000 that is required every year.

Can I work remotely for a US company from Puerto Rico?

Yes. If you are a bona fide resident and do the work in Puerto Rico, your wages are Puerto Rico-source income and are excluded from US federal income tax under IRC section 933, whoever the employer is. The exception is US government employees. Puerto Rico taxes those wages at its own graduated rates; the resident investor decree does not lower them. The Export Services Incentive (4% rate) is more beneficial for self-employed individuals and business owners who provide services to clients outside PR.

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