Act 60 Puerto Rico Tax Incentives 2026 – What You Need to Know

By Rosado Accounting | Rincón, Puerto Rico | Updated for 2026

If you have been hearing buzz about moving to Puerto Rico for incredible tax savings, you are not imagining things. Act 60 Puerto Rico tax incentives represent one of the most powerful legal tax strategies available to U.S. citizens today — and in 2026, they remain very much alive, very much legal, and very much worth understanding.

At Rosado Accounting, our CPA team in Rincón has helped entrepreneurs, investors, and business owners navigate Puerto Rico’s tax incentive landscape for years. Whether you are already living on the island or seriously considering the move, this guide will walk you through everything you need to know about Act 60 in plain language — no confusing tax jargon, just honest, expert advice from your neighbors on the west coast of Puerto Rico.

What Is Act 60? A Brief History

Act 60 of 2019, formally known as the Puerto Rico Incentives Code, is the sweeping legislation that consolidated and replaced two earlier landmark laws: Act 20 (the Export Services Act) and Act 22 (the Individual Investors Act). By merging these programs into a single, unified code, the Puerto Rico government streamlined the application process while preserving — and in many cases strengthening — the extraordinary tax benefits that had already attracted thousands of mainland U.S. residents to the island.

Think of Act 60 as the ultimate upgrade. Under one roof, it addresses both businesses that export services and individual investors seeking to minimize capital gains and dividend taxes. For 2026, these incentives remain fully operative, though the Puerto Rico government has continued refining compliance requirements to ensure participants are genuinely contributing to the island’s economy.

Chapter 2: Individual Investor Incentives (Former Act 22)

The individual investor component of Act 60 is what captures most headlines. Here is why: U.S. citizens who become bona fide residents of Puerto Rico can enjoy a 0% tax rate on capital gains and 0% tax rate on dividend income accumulated after establishing Puerto Rico residency. That means if you sell stocks, cryptocurrency, real estate investments, or other assets after moving to Puerto Rico, the gains you realize as a PR resident may be completely tax-free at the Puerto Rico level — and because Puerto Rico residents are exempt from federal income tax on Puerto Rico-sourced income, the savings can be extraordinary.

Chapter 3: Export Services Business Incentives (Former Act 20)

For entrepreneurs and business owners, Act 60’s export services component offers a flat 4% corporate tax rate on income derived from qualifying export services provided to clients outside of Puerto Rico. Compare that to the standard U.S. corporate tax rate of 21% — or individual rates that can climb to 37% — and it becomes clear why so many digital businesses, consultants, law firms, financial services companies, and tech startups are establishing Puerto Rico entities under Act 60.

Act 60 Puerto Rico Tax Benefits Summary for 2026

Let us lay out the headline numbers clearly so you can see exactly what is on the table:

• 4% flat corporate/income tax rate on export services income for qualifying businesses
• 0% Puerto Rico tax on capital gains generated after establishing bona fide residency
• 0% Puerto Rico tax on dividends from Act 60-qualifying businesses
• 0% Puerto Rico tax on interest income from certain qualifying sources
• Exemption from municipal license taxes for qualifying businesses during the decree period
• Tax decree valid for 15 years, providing long-term certainty and planning stability

These numbers are not loopholes or gray areas. They are deliberately written into Puerto Rico law to attract capital investment and economic talent to the island. The key is understanding and strictly meeting all the requirements — which is exactly where a qualified CPA becomes invaluable.

Act 60 Residency and Compliance Requirements

Here is where many people stumble: the benefits of Act 60 are very real, but so are the compliance obligations. The IRS and Puerto Rico Treasury Department take these rules seriously, and so should you.

Bona Fide Residency: The 183-Day Rule

To qualify as a bona fide Puerto Rico resident under Act 60, you must spend at least 183 days per year in Puerto Rico. But that is just the beginning. The IRS applies a multi-factor test to determine true residency, examining your:

• Presence test (183+ days in Puerto Rico)
• Tax home (your primary place of business or employment must be in Puerto Rico)
• Closer connection test (community ties, social connections, family, home ownership)

Simply spending half the year on the island while maintaining your primary home, business, and social life in New York or California will not cut it. The IRS has been increasingly vigilant about auditing Act 60 participants, and at Rosado Accounting we strongly advise clients to document their residency meticulously — including travel logs, utility bills, bank statements, and community involvement records.

The $10,000 Annual Charitable Donation Requirement

Individual investor decree holders under Act 60 are required to donate a minimum of $10,000 per year to Puerto Rico-based charitable organizations. This requirement was introduced to ensure that Act 60 participants contribute meaningfully to the local community — not just benefit from it. These donations must go to registered Puerto Rico nonprofits, and proper documentation is essential for compliance.

Annual Report and Compliance Filing

Decree holders must file an annual compliance report with the Puerto Rico Department of Economic Development and Commerce (DDEC). Failure to file on time or accurately can result in the revocation of your tax decree — meaning you lose all those beautiful benefits retroactively. This is not something to manage alone with a spreadsheet and good intentions.

Who Benefits Most from Act 60 Puerto Rico Tax Incentives?

Act 60 is not a one-size-fits-all solution, but it is remarkably versatile. The people who tend to benefit most include:

Remote Entrepreneurs and Digital Business Owners

If you run a consulting firm, software company, marketing agency, or any service-based business that serves clients outside of Puerto Rico, the 4% corporate rate under Act 60 can dramatically reduce your tax burden compared to mainland rates. With remote work now mainstream, relocating your business operations to Puerto Rico is more practical than ever.

Investors with Significant Capital Gains

Traders, crypto investors, real estate investors, and anyone holding appreciated assets can benefit enormously from the 0% capital gains rate. If you are sitting on substantial unrealized gains and are open to a lifestyle change, Puerto Rico offers a legally compelling path to tax-efficient wealth realization.

High-Income Professionals

Doctors, attorneys, financial advisors, and other licensed professionals who provide services to clients outside Puerto Rico may qualify under the export services chapter of Act 60, accessing the 4% rate on qualifying income.

Common Act 60 Mistakes to Avoid

After working with numerous clients navigating Puerto Rico’s tax incentive programs, our team at Rosado Accounting has seen the same mistakes come up repeatedly. Here are the most important ones to avoid:

• Assuming residency is automatic: Spending 183 days in PR is necessary but not sufficient. You must sever or substantially reduce your ties to your former state.
• Failing to keep a travel log: In an audit, you will need to prove exactly where you were on every day of the year. A detailed, contemporaneous log is essential.
• Delaying the decree application: Your 0% capital gains rate only applies to gains after you establish residency and receive your decree. Appreciation before that date is still taxable at U.S. rates.
• Ignoring state-level exit taxes: Some states like California and New York are aggressive about claiming residents who leave. You may owe a final-year state return and need to demonstrate a complete break from your former domicile.
• Missing annual compliance reports: A missed DDEC filing can jeopardize your entire decree.

Why Work with a Puerto Rico-Based CPA for Act 60?

Puerto Rico’s tax environment is uniquely complex. It sits at the intersection of U.S. federal tax law, Puerto Rico local tax code, and a specialized layer of incentive legislation that changes and evolves regularly. Not every CPA on the mainland fully understands how these systems interact — and mistakes in this arena can be extremely costly.

At Rosado Accounting, located right here in Rincón on the beautiful west coast of Puerto Rico, we live and work in this environment every day. We serve both English and Spanish-speaking clients, and we understand the nuances of Act 60 compliance from both the Puerto Rico Treasury and IRS perspectives. From initial decree applications to annual compliance filings, from business structuring to personal tax returns, we provide comprehensive support for Act 60 participants at every stage.

Our office at Carr. 115 Km 12.1 in Rincón is conveniently accessible to clients across the west coast, but we also serve clients remotely throughout the island and across the U.S.

Frequently Asked Questions About Act 60 Puerto Rico Tax Incentives

1. Do I still have to pay U.S. federal taxes if I move to Puerto Rico under Act 60?

As a U.S. citizen who becomes a bona fide Puerto Rico resident, you are still subject to U.S. federal income tax on income sourced outside of Puerto Rico. However, Puerto Rico-sourced income — including income from your Act 60 business and capital gains realized as a PR resident — is generally exempt from U.S. federal income tax under Section 933 of the Internal Revenue Code. This is one of the unique advantages Puerto Rico holds over foreign jurisdictions: you keep your U.S. passport and citizenship while accessing significant tax relief.

2. How long does it take to get an Act 60 decree approved?

The approval timeline for an Act 60 tax decree through the Puerto Rico DDEC typically ranges from three to nine months, though it can sometimes take longer depending on application volume and completeness of your submission. It is important to note that your tax benefits generally begin accruing from the date you establish bona fide residency, not necessarily from the date the decree is formally issued — but you must have an approved decree to claim the benefits. Starting the application process early is strongly recommended.

3. Can cryptocurrency gains qualify for the 0% capital gains rate under Act 60?

This is one of the most frequently asked questions we receive, and the answer is nuanced. Yes, cryptocurrency gains realized after you establish bona fide Puerto Rico residency on assets acquired after becoming a resident can potentially qualify for the 0% Puerto Rico capital gains rate. However, appreciation that accrued before you moved to Puerto Rico is generally still taxable at U.S. federal rates as a pre-residency gain. Proper planning — including a detailed cost-basis analysis before your move — is absolutely critical to maximizing your crypto tax savings under Act 60.

4. What happens if I leave Puerto Rico after receiving an Act 60 decree?

If you cease to be a bona fide Puerto Rico resident after receiving your Act 60 decree, you generally lose your decree benefits going forward. Depending on how the departure is handled, there may also be Puerto Rico exit tax implications on any appreciation that occurred during your residency period. Leaving Puerto Rico is not as simple as just buying a plane ticket home — there are significant tax consequences that must be planned for carefully. Always consult with a qualified CPA before making any decision to leave the island.