Puerto Rican residents are taxed in Puerto Rico on their worldwide income, no matter where the income is sourced. Puerto Rican non-residents are only taxed in Puerto Rico on their PR-source income. Income for services performed is sourced to Puerto Rico based on where the services are performed. Such income is typically prorated to Puerto Rico based on workdays.
Puerto Rico has a de minimis rule to avoid sourcing to Puerto Rico very small amounts of income from personal services. Income from personal services performed within Puerto Rico will not be considered from Puerto Rican sources if it is USD 3,000 or less and the individual was present in Puerto Rico for 90 days or less during the calendar year.
Personal income tax rates
The following rates remain in effect for 2015 and future years:
|Net taxable income (USD)
|Not over 9,000
|Over 9,000, but not over 25,000
||7% of the excess over USD 9,000
|Over 25,000, but not over 41,500
||USD 1,120 plus 14% of the excess over USD 25,000
|Over 41,500, but not over 61,500
||USD 3,430 plus 25% of the excess over USD 41,500
||USD 8,430 plus 33% of the excess over USD 61,500
Gradual adjustment tax
The gradual adjustment was reinstated for 2015 and future years. If the individual's net taxable income exceeds USD 500,000, they will have to pay an additional tax (i.e. gradual adjustment tax). This tax is 5% of the excess of the total net taxable income over USD 500,000, limited to 33% of their personal and dependents' exemption plus USD 8,895.
Alternate basic tax (ABT)
In addition to the regular income tax, individuals are required to compute an ABT assessed in accordance to a previous established table. The ABT taxable income is computed by adding back certain income items exempt from regular income tax. All individuals with an ABT net taxable income of USD 150,000 or more will need to calculate the ABT.