Strategic Intelligence on Puerto Rico Tax Incentives

Everything you need to know about Act 60: the 4% income tax rate, 0% capital gains, bona fide residency requirements, the December 2026 deadline, and how the decree contract works. A comprehensive walkthrough of Chapter 2 and Chapter 3.

What does a 37% federal rate versus a 4% Act 60 rate actually mean in dollars? We break down real-world tax savings for an investor, a business owner, and a retiring professional — with the math that shows when the move pays for itself.

The IRS evaluates your residency under three tests: physical presence, tax home, and closer connection. We explain each in detail — the 183-day rule, the 11 closer-connection factors, and the documentation that makes your position audit-proof.

Pre-move appreciation on stocks stays subject to US tax. Post-move gains are tax-free. After 10 years, everything becomes PR-source. We explain the lookback rule, the days-of-ownership allocation for non-marketable assets, and strategic timing.

Applications filed before December 31, 2026 are grandfathered at 0% on passive income. After that, new applicants get 4%. The difference can be hundreds of thousands of dollars over the life of a decree. Here's what you need to do before the window closes.

Chapter 2 requires a residential property purchase within two years. We compare Dorado, Condado, Palmas del Mar, and Rincón — price points, school districts, lifestyle fit, and what each neighborhood offers families relocating under a tax decree.