2026–2027 Update
The complete guide to Act 60 in 2026 and 2027: the December 31, 2026 filing date, the 4% rate from 2027, who qualifies, and how InvEstate Puerto Rico helps you relocate and buy your home.
2026 UPDATE: Puerto Rico enacted Act 38-2026 on March 10, 2026, amending the Act 60 framework for Resident Individual Investors. Applications submitted on or before December 31, 2026 remain subject to the tax framework applicable to that group, while applications submitted on or after January 1, 2027 are generally subject to a 4% preferential Puerto Rico income tax rate on qualifying interest, dividends, and certain post-residency capital gains. Eligibility, residency requirements, decree terms, and individual circumstances may affect the benefits available. Always consult qualified Puerto Rico tax and legal advisors before making decisions.
Under Act 38-2026, individuals who apply on or after January 1, 2027 are generally subject to a 4% preferential Puerto Rico income tax rate on qualifying interest, dividends, and certain capital gains accrued after becoming a bona fide Puerto Rico resident, rather than the prior 0% treatment.
Eligibility, sourcing rules, residency requirements, decree terms, and individual circumstances can affect the final tax treatment. Buyers considering relocation should coordinate their real estate timeline with qualified Puerto Rico tax and legal advisors.
Receiving an Act 60 decree and obtaining its intended tax treatment are not the same as simply owning a home in Puerto Rico. Resident Individual Investors must establish and maintain bona fide Puerto Rico residency and satisfy applicable federal and Puerto Rico requirements.
Puerto Rico residency generally requires satisfying the applicable federal presence test or an available alternative test or safe harbor. Maintain detailed records of your travel and days of presence.
Your tax home generally must be in Puerto Rico during the relevant tax year, subject to applicable federal rules.
Your facts and circumstances must support a closer connection to Puerto Rico than to the United States or another jurisdiction.
Relocating your primary residence is a substantive decision—not simply an address change. Work with qualified tax counsel to determine how the residency rules apply to your circumstances.
KEY BENEFITS
Existing framework for qualifying interest, dividends, and eligible post-residency capital gains, subject to bona fide residency, decree terms, and ongoing compliance.
KEY BENEFITS
New applicants are generally subject to a 4% preferential Puerto Rico income tax rate on qualifying interest, dividends, and certain post-residency capital gains, subject to eligibility, bona fide residency, decree terms, and ongoing compliance.
KEY BENEFITS
Qualifying export services businesses may benefit from a 4% Puerto Rico corporate income tax rate, along with other exemptions available under Act 60, subject to eligibility, decree terms, and ongoing compliance.
Reviewed on November 12, 2026 by Lizvette Robles (license C-23765) and Antonio Cartagena (license C-13471), licensed Puerto Rico real estate brokers, against the official texts: Act 38-2026, DDEC Bulletin 2026-004, DDEC Circular Letter 2026-001, the Incentives Code (Act 60-2019) and IRS Publication 570. Every benefit depends on eligibility, decree approval and continuing compliance.
The comparison covers the Resident Individual Investor program, formerly known as Act 22. The date that decides which column applies is the date you file, not the date your decree is approved.
Filed by December 31, 2026 | Filed from January 1, 2027 | |
|---|---|---|
Interest and dividends | 0% Puerto Rico tax | 4% Puerto Rico tax |
Capital gains on appreciation after you become a resident | 0% Puerto Rico tax | 4% Puerto Rico tax |
Benefit runs through | December 31, 2035 | December 31, 2055 |
Prior residency | Not a Puerto Rico resident between January 17, 2006 and January 17, 2012 | Not a Puerto Rico resident in the six years before your move |
Primary residence | Buy within two years of the decree | Buy within two years of the decree |
Who holds the title | Prior rules, which may allow an eligible Puerto Rico entity | You, you and your spouse, or a grantor trust under Section 2022.07; no LLC |
Property Registry | Prior rules | Title registered, or the deed presented for registration |
Federal tax | Separate analysis | Separate analysis |
If you file your Resident Individual Investor application by 11:59 p.m. on December 31, 2026, Puerto Rico taxes your qualifying interest, dividends and post-move capital gains at 0% through 2035. File on or after January 1, 2027 and the rate is 4% through 2055. Act 38-2026, signed on March 10, 2026, made the change. Both are Puerto Rico rates: neither one changes what you owe the IRS, which depends on your residency and the source of each income.
An application received through the DDEC Incentives Portal by 11:59 p.m. on December 31, 2026, as shown by the time stamp of the filing-fee payment (Bulletin 2026-004, I.2). An application filed by then keeps the 0% framework even if the decree is approved in 2027. Buying a home or starting a draft in the Portal does not count as filing.
Not in the same decree. If you choose coverage through 2055, the 4% applies from the start (Bulletin 2026-004, I.4). What DDEC does allow is to keep the 0% decree and, in 2035, its last year, ask to extend it to 2055. That request is treated as a new application at 4%, effective January 1, 2036, and only if the rules of Act 38-2026 are still in force then (Bulletin 2026-004, I.4).
Yes. You file a sworn amendment in the Incentives Portal and expressly waive the 0% rate (Bulletin 2026-004, I.3).
No. You must ask for a modification at any time until December 31, 2035. If it is approved, the 4% normally applies from January 1 of the year you file the request (Section 6020.03(d); Bulletin 2026-004, I.5). An approved extension changes your tax framework, so get advice before you request it.
It depends on when you file. For applications filed by December 31, 2026, you cannot have been a Puerto Rico resident between January 17, 2006 and January 17, 2012. For applications filed from January 1, 2027, you cannot have been a Puerto Rico resident during the six years before your move (Section 1020.02(a)(4)).
Yes. The DDEC asks for a certificate of criminal record from your last place of residence and runs a full background check. Convictions for fraud (wire, bank, securities, tax or mail) or economic crimes, or a pattern of offenses, are grounds to deny or archive an application (Bulletin 2026-004, II.3).
Three tests, every year, under IRC Section 937:
You file Form 8898 with the IRS in the year you become a resident if your worldwide gross income is over $75,000. The IRS's own example in Publication 570 is a taxpayer who kept his California house, accounts, license and voter registration. He was not a bona fide resident.
Yes. You must buy a property as your primary residence within two years of receiving the decree, from a seller with no relation to you, and keep full ownership of it as your primary residence for the whole life of the decree, reporting it every year (Section 6020.10(c), as amended by Act 38-2026, Article 5). You do not need to buy it before December 31, 2026: that date is for filing the application.
Not if you apply from January 1, 2027. Title must be in your own name, jointly with your spouse, or in a grantor trust that qualifies under Section 2022.07, and it must be registered in the Puerto Rico Property Registry or the deed presented for registration (Section 6020.10(c); Bulletin 2026-004, III). Applications filed in 2026 and decrees already approved may still buy through an eligible legal entity organized in Puerto Rico.
The exception almost nobody mentions: if you already hold a decree and ask to extend it to 2055 before you have bought and reported your home, you fall under the new rule. That means no LLC.
No. The home is one requirement of the decree; residency is a separate test with the IRS. A vacation home alone does not establish bona fide residency. You need both.
At least $15,000 a year: $10,000 in donations and a $5,000 fee with the annual report. The $10,000 is split into $5,000 to eligible organizations fighting child poverty, $2,500 to the Special Fund for Social Equality and $2,500 to other eligible Puerto Rico non-profits; the $2,500 to the Fund is part of the $10,000, not on top of it (Section 6020.10; DDEC Circular Letter 2026-001).
Every year you file the annual report, which since tax years beginning after December 31, 2024 goes together with your Puerto Rico tax return, make the donations, keep your primary residence and meet the residency tests and the other conditions of your decree. Late or missing reports can be fined up to $10,000 (Section 6020.10). There is also an application fee set by regulation; confirm the current amount with your incentives attorney.
No. The Resident Individual Investor decree covers qualifying interest, dividends and certain capital gains (Sections 2022.01 and 2022.02). Salaries and the income of an operating business need their own analysis, and export services are a separate Act 60 incentive with its own decree.
About 57% came from California, Florida, New York or Texas, according to the GAO's analysis of people who claimed the incentive on their 2021 Puerto Rico returns (GAO-26-107225, Table 2, base of 1,917 filers with an identifiable prior state).
State | Share of 2021 Act 60 filers |
|---|---|
California | 19.9% |
Florida | 15.1% |
New York | 13.2% |
Texas | 9.1% |
New Jersey | 4.5% |
Illinois | 4.1% |
Nevada | 3.9% |
Colorado | 2.7% |
Massachusetts | 2.6% |
It depends on the state. California's top rate on interest, dividends and long-term capital gains is 13.3% in 2026; Florida, Texas and Nevada charge 0%. Top rates as of January 1, 2026 (Tax Foundation; New York instructions IT-2105-I):
State | Top rate 2026 | From |
|---|---|---|
California | 13.3% (includes the 1% Mental Health Services Tax) | $1,000,000 |
New York City | 9.65% state + 3.876% city | $1,077,550 (state) |
New Jersey | 10.75% | $1,000,000 |
Massachusetts | 9% (5% + 4% surtax) | $1,083,150 |
Illinois | 4.95% flat | first dollar |
Colorado | 4.4% flat | first dollar |
Florida, Texas, Nevada | 0% | — |
Only on Puerto Rico-source income. Under IRC Section 933, a bona fide resident excludes Puerto Rico-source income from the federal return; having a decree and living here does not turn other income into excluded income:
The appreciation from before your move has its own rules. In Puerto Rico, the long-term gain attributable to it pays 5% if you recognize it after ten years of residency and before January 1, 2036 (applications filed in 2026) or before January 1, 2056 (applications filed from 2027). At any other time, the Puerto Rico Internal Revenue Code applies (Section 2022.02). On the federal side, if you were a U.S. resident in any of the ten years before your move, that gain still pays federal tax.
In this illustration, a Californian pays up to about $445,200 by staying home and about $62,600 in Puerto Rico with a decree filed in 2026, or about $110,600 with one filed in 2027. It assumes a single filer with a $1,000,000 long-term gain on stock bought after becoming a Puerto Rico resident and $200,000 of dividends from U.S. companies, with federal tax at the 23.8% top rate (20% + 3.8%); the real figure is somewhat lower. It is an illustration with 2026 top published rates, not tax advice.
Moving from | Stays home (federal + state) | Puerto Rico, decree filed in 2026 | Puerto Rico, decree filed in 2027 |
|---|---|---|---|
California | up to ~$445,200 | ~$62,600 | ~$110,600 |
New York City | up to ~$447,800 | ~$62,600 | ~$110,600 |
Illinois | up to ~$345,000 | ~$62,600 | ~$110,600 |
Florida or Texas | up to ~$285,600 | ~$62,600 | ~$110,600 |
The Puerto Rico columns include the $47,600 of federal tax on the U.S. dividends, which does not change, the 4% where it applies, and the $15,000 a year the decree costs.
Understanding Act 60 is one part of the decision. Choosing where and how to live in Puerto Rico is another.
InvEstate Puerto Rico advises relocation buyers on the real estate side of the move, from comparing communities such as Dorado, Condado, Guaynabo, Río Grande and Isla Verde to evaluating properties, negotiating the purchase and coordinating the closing with your attorneys, CPAs, lenders and other advisors.
Not sure where to start? Read our broker's guide to Act 60 real estate in Puerto Rico: where Act 60 families actually live, what they buy, and how a Puerto Rico closing works. Or call us at (787) 717-6443.
General information from Antonio Cartagena (license C-13471) and Lizvette Robles (license C-23765), licensed Puerto Rico real estate brokers. We handle the real estate side of your move. This page is not legal, tax, accounting or investment advice: benefits depend on the law, your circumstances, the terms of your decree and continuing compliance. Confirm every figure with your Puerto Rico incentives attorney and your CPA.
This page is provided for general informational purposes only and does not constitute legal, tax, accounting, or investment advice. Act 60 eligibility and tax treatment depend on individual circumstances, decree terms, residency requirements, applicable law, and continuing compliance. Consult qualified Puerto Rico legal and tax professionals before making decisions.
Last reviewed: September 30, 2026.
Act 60 may influence the financial side of your relocation. We help you navigate the real estate side. From choosing the right community to evaluating and acquiring the right property, INVESTATE Puerto Rico provides local representation throughout your move.