Moving to Puerto Rico
Puerto Rico is part of the U.S., but it has its own income tax. Once you are a bona fide resident, Puerto Rico taxes what you earn there and the IRS doesn't. Housing costs far less: median rent was $580 a month in 2024, against $1,487 nationally.
What our calculators can and can't tell you here
Our state-to-state calculator can't model a move to Puerto Rico: BEA publishes no price level for the island, and Puerto Rico's income tax replaces both the federal tax on local income and a state tax. The figures on this page come straight from the IRS, the Census Bureau, federal agencies and Puerto Rico's own laws, with the year of each. For the other territories, see moving to a U.S. territory.
Federal income tax after you move
Under IRC §933, a bona fide resident of Puerto Rico doesn't pay U.S. income tax on income from Puerto Rico sources. Pay for work you do while in Puerto Rico is Puerto Rico income, even when your employer is in a state. What still goes on a U.S. return (IRS Publication 570):
- income from outside Puerto Rico, such as interest and dividends paid by U.S. companies and gains on U.S. real estate;
- gains on stocks and other investments you owned before the move, when you sell within 10 years of becoming a resident, unless you elect to split the gain by holding period;
- wages from the federal government;
- self-employment tax (Social Security and Medicare) on net self-employment earnings of $400 or more, on Form 1040-SS if you have no other U.S. return.
Bona fide residence is more than a day count. Besides 183 days on the island, your main place of work must be there and your closer connection must be to Puerto Rico: the IRS weighs where your home, family, car, bank, driver's license and voter registration are. It runs an active compliance campaign on people who claim Puerto Rico's investor incentives without meeting these rules.
For the first year you're a bona fide resident, file Form 8898 if your worldwide gross income is more than $75,000 (the penalty for not filing is $1,000). In the year you move, you pass the tax home and closer connection tests if you meet them for the last 183 days of the year, weren't a bona fide resident of Puerto Rico in any of the three years before, and stay one for each of the next three years. You still have to meet the presence test for the move year (for example 183 days on the island), so if you arrive too late in the year to meet it, you generally become a bona fide resident the following year.
Puerto Rico income, sales and property tax
Puerto Rico taxes its residents on their income from everywhere, with a credit for income tax paid to the U.S. on U.S.-source income. After personal and dependent exemptions, the rates on net taxable income are:
Puerto Rico individual income tax rates on net taxable income
| Net taxable income | Tax |
|---|---|
| Up to $9,000 | None |
| $9,000 to $25,000 | 7% of the amount over $9,000 |
| $25,000 to $41,500 | $1,120 + 14% of the amount over $25,000 |
| $41,500 to $61,500 | $3,430 + 25% of the amount over $41,500 |
| Over $61,500 | $8,430 + 33% of the amount over $61,500 |
Internal Revenue Code of 2011, Section 1021.01, as compiled on May 28, 2026. You then pay 95% of the result, or 92% if your gross income is $100,000 or less. Above $500,000 of taxable income, a 5% add-on phases out the benefit of the lower brackets and exemptions.
A bill to widen these brackets, so the 33% rate would start above $150,000 (Senate Bill 912 and House Bill 1014, filed January 12, 2026), drew objections from Puerto Rico's Oversight Board over its cost. The official compilation of the code from May 28, 2026 still has the table above, so check with Hacienda before you rely on it.
Sales and use tax (IVU) is 11.5% on most goods and many services: 10.5% to Puerto Rico and 1% to the municipality. Property tax: homeowners paid a median $619 a year in 2024, against $3,211 nationally (Census ACS).
Act 60 in 2026: the investor incentive is changing
Act 60, the Puerto Rico Incentives Code, cuts Puerto Rico's tax on investment income for people who move to the island and get a Resident Individual Investor decree from the Department of Economic Development and Commerce. Act 38-2026 changed the terms for new applicants. Which rules you get depends on when you apply:
Puerto Rico tax under an Act 60 resident investor decree, by application date
| Rule | Apply by December 31, 2026 | Apply from January 1, 2027 |
|---|---|---|
| Interest and dividends | 0% through 2035 | 4% through 2055 |
| Gains on value built up after the move | 0% through 2035 | 4% through 2055 |
| Gains built up before the move, sold after 10 years of residence | 5% through 2035 | 5% through 2055 |
| Who can apply | Not a Puerto Rico resident between January 17, 2006 and January 17, 2012 | The same, and no Puerto Rico residence in the 6 years before the move |
| Home | Buy a home in Puerto Rico within 2 years of the decree | The same, owned in your name, jointly with your spouse or through a qualifying trust |
Every resident investor also gives $10,000 a year to Puerto Rico nonprofits ($5,000 of it to groups working against child poverty on a list the legislature publishes) and pays a $5,000 annual report fee. Rates after each end year follow the regular Internal Revenue Code.
These are Puerto Rico rates only. They don't change U.S. law: interest and dividends from U.S. payers stay U.S.-source income that the IRS taxes, and so, for 10 years, do gains on investments you owned before moving. A decree helps only if you are a bona fide resident, which is exactly what the IRS campaign checks.
Puerto Rico Incentives Code (Act 60-2019), Sections 1020.02(a)(4), 2022.01, 2022.02 and 6020.10, as amended by Act 38-2026, official compilation. The 0% column covers decrees applied for by December 31, 2026 that aren't revoked.
Cost of living in Puerto Rico
BEA publishes no price level for Puerto Rico, so we can't say how far a salary goes there. The Census Bureau's yearly survey does cover housing and incomes:
Median income, rent and home value: Puerto Rico, San Juan and the U.S., Census ACS 2024
| Median | Puerto Rico | San Juan | U.S. |
|---|---|---|---|
| Household income | $27,213 | $30,447 | $81,604 |
| Gross rent (monthly) | $580 | $594 | $1,487 |
| Home value | $142,100 | $173,100 | $360,600 |
Census ACS 2024 1-year estimates (the Puerto Rico Community Survey); San Juan is the municipio. Margins of error: ±$751 income, ±$14 rent and ±$1,869 home value for Puerto Rico; ±$1,951, ±$43 and ±$6,936 for San Juan. U.S. figures: Census ACS 2024. Gross rent includes the utilities a renter pays.
Electricity: LUMA runs the grid, but rates are set by the Puerto Rico Energy Bureau, which issued a new rate order on April 15, 2026 and resets the fuel and purchased-power charges every quarter. See the current factors on LUMA's rates page before you budget.
Social Security, Medicare and health coverage
- Social Security retirement, disability and survivor benefits keep coming: SSA treats Puerto Rico as part of the U.S. for payments.
- Medicare Part B isn't automatic. Residents already getting Social Security are enrolled in Part A automatically but must sign up for Part B (Form CMS-40B) during the seven-month initial enrollment period around their 65th birthday. Otherwise the Part B premium rises 10% for each full year they could have had it (SSA).
- SSI stops. Supplemental Security Income isn't paid in Puerto Rico (SSA).
- No HealthCare.gov Marketplace. Territory residents can't buy Marketplace plans or get their premium tax credits (HealthCare.gov).
- No presidential vote. The Electoral College has no electors for Puerto Rico (National Archives), and federal overseas-voting law counts the island as part of the U.S., so you can't keep voting absentee in your old state as an overseas voter.
Driver's license and bringing a car
License: a valid license from a state is good for your first 180 days after you arrive (Vehicles and Traffic Law, Article 3.05). Then swap it at a CESCO office. There's no written or road test, but you need a medical certificate from a doctor licensed in Puerto Rico (no more than 6 months old), a driving record from your old state (no more than 30 days old), proof of address and $18 in fees, $35 for a REAL ID. CESCO keeps your old license (form DTOP-DIS-257).
Shipping a car: the Jones Act (the coastwise shipping law) applies to Puerto Rico. Crowley publishes an estimate of $1,140 from Jacksonville to San Juan for a passenger vehicle, including port and fuel surcharges, with insurance extra. It charges $75 to drain more than a quarter tank of fuel and doesn't allow personal items in the car.
Excise tax: before the port releases your car, you pay Puerto Rico's excise tax (arbitrio) online in Hacienda's SURI system. Hacienda's inspectors leave an appraisal form (SC 2071) in the car; you upload it with the title and bill of lading, and the release takes 3 to 7 days. The tax is figured on Hacienda's taxable price for your car, not on what you paid, so get an estimate by VIN in SURI before you ship.
Puerto Rico excise tax on a car brought from a state, by Hacienda taxable price
| Hacienda taxable price | Excise tax | Share of price |
|---|---|---|
| $10,000 | $1,028 | 10.3% |
| $20,000 | $2,923 | 14.6% |
| $30,000 | $5,171 | 17.2% |
| $50,000 | $10,991 | 22.0% |
Rates for cars brought in after October 31, 2014: $637.50 up to $6,170, then rising in steps to 34% of the amount over $44,890 (Internal Revenue Code Section 3020.08(a)(3); Hacienda's table). Trucks, motorcycles and other vehicles pay flat percentages. Crowley describes the release steps.
Hurricanes and earthquakes
FEMA's National Risk Index rates Puerto Rico "Insufficient Data", so the island has no risk score on our disaster pages. Since 2017 it has had 9 federal major disaster declarations:
- Hurricane Irma (Sep 10, 2017)
- Hurricane Maria (Sep 20, 2017)
- Earthquakes (Jan 16, 2020)
- Hurricane Isaias (Sep 9, 2020)
- Severe storm and flooding (Nov 5, 2020)
- Severe storm, flooding and landslides (Mar 29, 2022)
- Hurricane Fiona (Sep 21, 2022)
- Severe storms, flooding, landslides and mudslides (Jul 23, 2024)
- Tropical Storm Ernesto (Nov 27, 2024)
FEMA major disaster declarations through September 25, 2026, COVID-19 aside. Before you buy, ask about flood zones, roof ratings and generator or solar backup, and get insurance quotes.
Moving to Puerto Rico: checklist
- Keep proof of your move date and ties: lease or deed, utility bills and travel records for the 183-day count.
- For the first year you're a bona fide resident, if your worldwide gross income that year is over $75,000, mail Form 8898 to the IRS by your return's due date, on its own and not with your return. Also send Form 8822 so the IRS has your new address.
- Ask your employer to withhold Puerto Rico income tax instead of your old state's from your move date.
- Turning 65 soon? Sign up for Medicare Part B on time.
- Get an excise estimate by VIN in SURI before you ship a car, and allow 3 to 7 days for its release.
- Swap your driver's license at a CESCO within 180 days of arriving.
- Applying for Act 60? File by December 31, 2026 for the 0% terms; later applications get 4%.
- Register to vote at your new address.
Frequently asked questions
Do I pay U.S. income tax if I move to Puerto Rico?
Not on income from Puerto Rico sources once you're a bona fide resident: IRC §933 excludes it, and Puerto Rico taxes it instead. Wages for work you do while in Puerto Rico count as Puerto Rico income. You still file a U.S. return for income from elsewhere, such as interest and dividends from U.S. companies, and pay U.S. self-employment tax if you're self-employed.
How long do I have to live in Puerto Rico to be a resident for taxes?
The usual presence test is 183 days on the island in the tax year. You must also have your main place of work there and no closer connection to a state, judged by your home, family, car, bank, driver's license and voter registration. In the year you move, those last two tests look at the last 183 days of the year.
What is the Act 60 tax rate in 2026?
For a resident investor decree applied for by December 31, 2026, Puerto Rico taxes interest, dividends and gains after the move at 0% through 2035. Applications from January 1, 2027 get a 4% rate through 2055. Either way, U.S. tax on U.S.-source income still applies.
How much does it cost to ship a car to Puerto Rico?
Crowley's published estimate from Jacksonville to San Juan is $1,140 for a passenger vehicle, insurance extra. Puerto Rico's excise tax comes on top: about $1,028 on a car with a $10,000 Hacienda taxable price and $5,171 at $30,000.
Is Puerto Rico cheaper than the mainland?
Housing is. Median gross rent was $580 a month and the median home $142,100 in 2024, against $1,487 and $360,600 nationally. Incomes are lower too (a $27,213 median household income), and BEA publishes no price level that compares everyday costs with the states.