Puerto Rico Tax Changes for 2025: What You Need to Know

The most critical update for expats and digital nomads: Act Now to Lock in 0% Benefits!

What's Changing for Act 60 Investors and Businesses

Under the leadership of Governor Jenniffer González, Puerto Rico is considering significant tax changes that will affect investors, expatriates, and businesses under Act 60. While the final details are still being worked out, the key updates are:

• New 4% Tax for Future Act 60 Individual Investors: Starting January 1, 2026, new investors will pay a 4% tax on passive income. Current Act 60 recipients will maintain their 0% tax rate.
• Residency Requirement: New applicants must prove they have not been residents for the past six years.
• Extension of Act 60 to 2055: The Act will remain in effect until 2055, but new applicants will face the 4% tax rate starting in 2036.

What It Means for Residents

The broader tax reforms propose reducing the tax on capital gains, interest, and dividends for all residents to 4%. This move aims to match Act 60 benefits and create more tax savings for Puerto Rico locals.

Compliance and Opportunities

While the 4% tax may seem concerning, Puerto Rico remains highly attractive for investors. U.S. investors can still benefit from significant tax advantages, and Act 60's extension to 2055 provides long-term certainty. Acting quickly in 2025 can secure 0% rates for those who qualify.

Why Puerto Rico Remains a Tax-Friendly Destination

Despite the new 4% tax, Puerto Rico continues to offer a unique advantage. It exempts U.S.-source income for bona fide residents, while the IRS exempts Puerto Rico-sourced income. This creates substantial tax savings for investors and businesses.