This article provides a clear overview of individual income tax in Puerto Rico for the 2025 tax year. You’ll find key information on the progressive tax framework, current tax brackets, and applicable surtaxes based on official data.
Puerto Rico’s Individual Income Tax System in 2025
Puerto Rico applies a progressive personal income tax, assessed on net income. The system distinguishes multiple tax brackets, meaning marginal tax rates increase as taxable income rises. The national currency for tax payment is the United States Dollar (USD).
Individual Income Tax Brackets (2025)
The following table outlines the personal income tax brackets applicable for 2025. The rates are applied progressively by income range, as shown:
| Taxable Income Range (USD) | Rate (%) |
|---|---|
| $0 – $9,000 | 0% |
| $9,000 – $25,000 | 7% |
| $25,000 – $41,500 | 14% |
| $41,500 – $61,500 | 25% |
| Over $61,500 | 33% |
Income is taxed at the rate assigned to each bracket as you move up in earnings. For example, only income above $41,500 (but below $61,500) is taxed at 25%. Anything over $61,500 will be taxed at 33%.
Key Surtaxes and Additional Taxes
Puerto Rico imposes additional taxes—called surtaxes—in certain situations. The most notable are:
| Surtax Rate (%) | Condition |
|---|---|
| 5% | Net taxable income exceeds $500,000 (gradual adjustment tax), limited to 33% of personal and dependents’ exemption plus $8,895 |
| 1% | Alternate Basic Tax (ABT): Net income subject to ABT in excess of $25,000 but not more than $50,000 |
| 3% | ABT: Net income subject to ABT in excess of $50,000 but not more than $75,000 |
| 5% | ABT: Net income subject to ABT in excess of $75,000 but not more than $150,000 |
| 10% | ABT: Net income subject to ABT in excess of $150,000 but not more than $250,000 |
| 24% | ABT: Net income subject to ABT in excess of $250,000 |
“Alternate Basic Tax” (ABT) is triggered if an individual’s tax liability falls below standard calculations, ensuring a minimum tax payment from higher net income brackets.
Tax Base and Assessment Method
Personal income tax in Puerto Rico is assessed on net income, which typically means gross income minus permitted deductions, exemptions, and allowances according to the local legislation. Official data does not provide exact deduction amounts or a holding period for assets for 2025. Tax rates and brackets apply strictly to income earned within the year.
Pro Tips: Navigating Puerto Rico Income Tax in 2025
- Ensure accurate bracket calculation: Review your net taxable income and confirm it aligns with the correct bracket before filing, especially if your earnings approach a new threshold.
- Monitor for ABT triggers: If you have complex deductions or substantial investment income, consider calculating your potential Alternate Basic Tax liability well in advance to avoid surprises.
- Keep track of surtax conditions: Higher earners (above $500,000) should be aware of the 5% gradual adjustment surtax, which may significantly increase your tax outlay.
- Document deductions comprehensively: Although not all deduction data is shown here, maintaining detailed records will facilitate compliance and faster filing if authorities request supporting documents.
- Verify official sources for regulatory updates: Always consult the main government website, such as hacienda.pr.gov, for current legal documentation and announcements.
Summary of Puerto Rico’s Individual Tax Framework
Puerto Rico’s 2025 individual income tax structure is progressive, with rates ranging from 0% up to 33%, alongside specific surtaxes for higher income brackets and alternate minimum tax provisions. Surtaxes, particularly the ABT, can significantly affect taxpayers with larger or more complex incomes. Detailed attention to bracket limits and proactive documentation remain crucial for efficient compliance. As always, up-to-date information from official sources is essential for any tax planning in Puerto Rico.