Puerto Rico

Individual - Deductions

Last reviewed - 10 November 2023

Itemised deductions

Puerto Rican residents and non-resident US citizens can claim the following itemised deductions to reduce their gross income. Puerto Rican non-resident foreign nationals may not claim these deductions.

Charitable contributions

Charitable contributions will be allowed as a deduction to the extent they are made to charitable organisations qualified by the Secretary and provide services to residents of Puerto Rico.

The contributions are subject to 50% of adjusted gross income (AGI).

Education expenses

Interest paid on student loans for qualified individuals is deductible, as are contributions to Puerto Rican educational individual retirement accounts (IRAs).

Medical expenses

Qualified medical expenses in excess of 6% of AGI are allowed as deductions.

Mortgage interest

Mortgage interest paid on qualified residential property is deductible, limited to USD 35,000 or 30% of AGI, whichever is lower.

Retirement plans

Contributions to Puerto Rican IRAs are deductible, limited to USD 5,000 per individual in addition to contributions made to employer sponsored qualified retirement plans. Contributions to government retirement systems are also deductible.

For taxable years beginning after 31 December 2018, contributions to governmental pension or retirement systems will be considered a reduction to the taxable wages, instead of an itemised deduction available in the tax return.

Casualty losses

Casualty losses on a primary residence and certain personal property can be claimed as deductions.

Health Savings Account contributions

Contributions to a Health Savings Account will not be allowed as itemised deductions.

Standard deductions

There is no standard deduction in Puerto Rico.

Personal exemptions

The personal exemption is USD 3,500 per individual and USD 7,000 for married taxpayers living together and filing jointly.

The exemption for each dependant is USD 2,500.

The veteran's exemption is USD 1,500.

Puerto Rican non-resident foreign nationals are not allowed any exemptions.

Net operating loss (NOL) deduction

For taxable years beginning after 31 December 2018, the NOL carryforward allowed will be increased from 80% to 90% of the net income.

The current 50% limitation on the NOL carryover for individuals with a net loss in a trade or business for three consecutive taxable years is eliminated, thus allowing a 100% NOL carryover.