The 2026 law change, and how the calculator applies it

Act 38-2026 (signed 10 March 2026) sets the Puerto Rico rate on post-move capital gains, interest and dividends by when you apply for your resident individual investor decree:

Applied for on or before 31 December 2026: 0%, for gains realized before 1 January 2036 (Incentives Code §2022.02(b)).
Applied for on or after 1 January 2027: a fixed 4%, for gains realized before 1 January 2056 (§2022.02(d)). Applicants must also show they lived outside Puerto Rico for the six years before moving (§1020.02(a)(4)).

You choose which applies in the calculator. It defaults to applying from 2027, because the 0% window closes on 31 December 2026. Existing decrees keep their terms.

How This Calculator Works

The calculator compares two annual tax bills: staying in your current state, and moving to Puerto Rico under an Act 60 decree. For the move it counts Puerto Rico's regular tax on your wages, federal tax on gains that built up before you moved, the 4% rate on qualifying export services income, and an allowance for compliance costs and the required charitable donation. The difference is the estimated annual net benefit.

Inputs and Assumptions

Annual wages and other ordinary income: Salary and other income taxed at ordinary rates, earned in Puerto Rico after the move. A bona fide resident excludes it from the federal return (IRC §933) and pays Puerto Rico's regular graduated tax on it; Act 60 rates do not apply to it.
Post-move capital gains: Annual gains on investments bought after you become a Puerto Rico resident.
Pre-move unrealised gains: Gains already built up before the move. These remain subject to US federal tax when sold.
Export services income: Income from services provided from Puerto Rico to clients outside it.
Current state: Your state's income tax is worked out on its own brackets from our state tax data, on all the income you enter (state deductions and credits are not subtracted, so it can be slightly high). A custom rate, if you enter one instead, is applied to all of that income. Washington has no income tax but taxes long-term capital gains (7% above a $278,000 deduction for 2025, 9.9% on taxable gains above $1 million; RCW 82.87), so choosing Washington applies that tax to your gains.
When you apply for your decree: by 31 December 2026 (0%) or from 1 January 2027 (4%).

Assumptions: single filer; federal figures for 2026 with the $16,100 standard deduction; Puerto Rico figures for 2025, the latest Hacienda has published; gains are long-term; legal and accounting costs of $7,500 a year (the midpoint of a $5,000–$10,000 range we assume), the $5,000 annual report fee set by law and a charitable donation of $10,000 a year.

Formula

ordinary      = wages + exportIncome
taxable       = max(0, ordinary + postMoveGains − $16,100)

// Staying put (2026, single)
withoutAct60 = federalTax(taxable − gains part)            // brackets
             + postMoveGains stacked through §1(h):       // 0% to $49,450, 15% to $545,500, 20% above
             + 3.8% × min(postMoveGains, ordinary + postMoveGains − $200,000)
             + stateTax(ordinary + postMoveGains)          // the state's own brackets
             + preMoveTax

// Pre-move gains: the same federal tax on both sides, stacked on top of
// the staying side's taxable income, plus NIIT. It cannot move the net benefit.

// With Act 60
withAct60 = puertoRicoTax(wages)                          // regular graduated tax, below
          + prRate × postMoveGains                        // 0% if applied for by 2026, 4% from 2027
          + preMoveTax
          + exportIncome × 4%
          + $7,500                                        // legal and accounting, assumed
          + $5,000                                        // annual report fee, §6020.10(d)
          + $10,000                                       // donation, §6020.10(b)

netBenefit = withoutAct60 − withAct60
breakEven  = the post-move gains at which netBenefit reaches 0
             (searched on the whole calculation)

Puerto Rico tax on wages

Net taxable income is your wages less the $3,500 personal exemption, taxed on Hacienda's table: 0% to $9,000; 7% to $25,000; $1,120 plus 14% to $41,500; $3,430 plus 25% to $61,500; $8,430 plus 33% above. Above $500,000 of net taxable income a gradual adjustment adds 5% of the excess, up to $8,895 plus 33% of the exemption (Schedule P). The tax due is 95% of the result, or 92% when gross income is $100,000 or less (Code §1021.01(c)); all the income you enter counts toward that test.

Data Sources

Puerto Rico Act 60-2019 (Incentives Code), as amended, administered by DDEC — resident individual investor and export services incentives. Consolidated text from Puerto Rico's Office of Management and Budget (revised 16 July 2026), including Act 38-2026: §1020.02(a)(4) (eligibility and the six-year look-back), §2022.01 and §2022.02 (rates by decree application date), §6020.10 (annual donation, home purchase, and in (d), added by Act 40-2020 §89, the $5,000 annual charge for filing the annual report).
DDEC Circular Letter 2026-001 (12 January 2026) — the annual donation: at least $10,000 a year for an Act 60 investor decree, $5,000 of it to child-poverty nonprofits ($5,000 a year applies to older Act 22 decrees).
Washington RCW 82.87 and the Washington Department of Revenue — the capital gains excise, for people moving from Washington.
IRS Revenue Procedure 2025-32 — 2026 federal brackets and long-term capital gains thresholds, via our shared tax data module.
Internal Revenue Code §1(h) — long-term capital gains rates and stacking; §1411 — Net Investment Income Tax, 3.8% above $200,000 (single).
Internal Revenue Code §933 and IRS Publication 570 (2025), "Bona Fide Resident of Puerto Rico" — Puerto Rico-source income, wages for work done there among it, is left off the federal return; a federal return is needed only for income from other sources.
Departamento de Hacienda, Instructions to Complete the 2025 Individual Income Tax Return — tax table, personal exemption (line 7), gradual adjustment (Schedule P) and the 95% / 92% rule (line 17).

Limitations

Puerto Rico tax on wages uses the 2025 table, the latest published; itemised deductions, dependants, the alternate basic tax and one-off relief payments are not modelled.
The decree rate is applied to post-move capital gains only. Interest and dividends get the same rate under the decree but are not separate inputs. Gains on assets held before the move that are sold after ten years of residence can qualify for a 5% Puerto Rico rate (§2022.02(a) and (c)); this is not modelled.
The charitable donation is $10,000 a year, the legal minimum. Annual decree fees (set by regulation) and the cost of buying a home are not included.
For Washington, the capital gains excise is part of the break-even search like any other state tax. It starts only above its deduction, so it changes the break-even only when that point is above the deduction.
Federal tax uses the basic standard deduction; itemised deductions and the age-65 and senior deductions are not modelled. State tax is on all income entered, before state deductions and credits.
Pre-move gains are given the same federal tax on both sides. As a Puerto Rico resident your Puerto Rico income is left off the federal return, so the real federal tax on those gains may be lower than shown.
The bona fide residence tests (IRC §937), the rules for US-source income, Puerto Rico tax on pre-move gains, and state exit and domicile rules are not modelled.
Only single filing status is modelled.

Last Updated

October 2026 — Methodology page published. Pre-move gains corrected to be taxed identically on both sides of the comparison (previously the "stay" side used one flat rate, which shifted the net benefit by tens of thousands of dollars for large gains). Act 38-2026 now modelled: 4% on post-move gains for decrees applied for from 2027, chosen by the user. Annual donation corrected from $5,000 to $10,000. Washington's capital gains tax now counted for people moving from Washington.

14 October 2026 — Puerto Rico's regular tax on wages is now counted on the Act 60 side (it was left out while the staying side counted federal tax on the same wages). The staying side now applies the standard deduction, stacks post-move gains through the §1(h) bands, limits NIIT to income above $200,000 and uses your state's own brackets instead of its top rate on every dollar. Break-even is found on the whole calculation. With $150,000 of wages and $200,000 of gains at a 5% state rate, the net benefit falls from about $58,000 to about $17,800.

14 October 2026 (follow-up) — The $5,000 annual charge for filing the decree's annual report (Incentives Code §6020.10(d)) is now counted as its own cost. The $7,500 estimate was described as covering reporting too, but its $5,000–$10,000 range could not hold a $5,000 fee and the legal and accounting work as well. Fixed costs are now $22,500 a year, so the net benefit is $5,000 lower and the break-even higher: for a Californian with no other income applying from 2027, about $177,000 of gains a year instead of $152,000.

Puerto Rico Act 60 Calculator — Methodology