Act 60 Puerto Rico: Complete Guide to Tax Incentives and Benefits

Act 60 is Puerto Rico’s consolidated tax incentive law that combines earlier programs such as Act 22 (Individual Resident Investors) and Act 20 (Export Services). It offers significant tax benefits to qualified individuals and businesses that relocate to or operate in Puerto Rico under approved decrees.

Below is a clear, up-to-date overview based on recent 2026 legislative developments.

What Is Act 60?

Act 60 is a Puerto Rico tax incentive framework designed to attract investors, entrepreneurs, and businesses. It allows eligible participants to receive preferential tax treatment in exchange for meeting strict residency and compliance requirements.

Recent updates confirm that the program has shifted from its original 0% tax structure for new applicants to a 4% tax framework beginning in 2026–2027, while existing decree holders are generally grandfathered.

Sources indicate the program has also been extended to 2055, providing long-term stability for approved participants.

Key Requirements for Individual Investors

1. Bona Fide Residency

To qualify for individual tax benefits, you must become a bona fide resident of Puerto Rico. This typically requires:

Spending at least 183 days per year in Puerto Rico
Establishing your tax home in Puerto Rico
Demonstrating a closer connection to Puerto Rico than any other jurisdiction

These requirements align with IRS residency rules.

2. Six-Year Prior Non-Residency Rule

Recent legislation introduces stricter eligibility rules for new applicants. Under proposed updates:

Applicants must not have been Puerto Rico residents for at least six years prior to applying.

This rule is designed to ensure incentives target genuinely new residents.

3. Income Tax Structure (New vs. Existing Applicants)

There is now a two-tier system:

Existing Decree Holders

Continue enjoying 0% tax on qualifying dividends, interest, and capital gains (subject to decree terms).

New Applicants (After 2026 Deadlines)

Subject to a 4% tax rate on:
- Dividends
- Interest
- Capital gains accrued after becoming a resident

The 4% structure applies to applications submitted after the legislative cutoff (generally after December 31, 2026, depending on final enactment).

Program Extension to 2055

The updated legislation extends the program’s sunset date from 2035 to 2055, creating long-term planning certainty for investors.

This extension is considered a major structural improvement for long-term investors and businesses.

Residency and Property Requirements

Under recent amendments:

Investors must purchase a principal residence in Puerto Rico within two years of receiving their decree.
For newer applicants, the property must be properly registered and meet specific ownership requirements.

This prevents indirect ownership structures that previously created compliance concerns.

Act 60 for Businesses (Export Services)

Under the Export Services incentive:

Eligible businesses may qualify for a 4% corporate tax rate on approved income.
The services must generally be provided to clients outside Puerto Rico.
A local office and compliance filings are typically required.

This program remains highly popular among digital entrepreneurs, consultants, and trading firms.

Why Act 60 Matters in 2026

Recent reporting confirms that Puerto Rico is transitioning from a 0% headline incentive to a 4% low-tax framework for future applicants, while maintaining competitiveness compared to most U.S. jurisdictions.

Key takeaways:

Existing investors keep their protections.
New applicants face updated residency rules.
The program is extended long-term.
Timing now plays a critical role in eligibility.

Common Misunderstandings

Many people believe simply moving to Puerto Rico automatically qualifies them. That is incorrect.

You must:

Apply for and receive an official tax decree
Meet residency tests
Maintain compliance annually
Follow reporting requirements

Without a formal decree, Act 60 benefits do not apply.

Conclusion

Act 60 remains one of the most significant tax incentive programs in the United States territory system. While recent reforms introduce a 4% tax rate for new applicants, the program still offers substantial advantages for those who meet residency and compliance requirements. The extension through 2055 signals long-term commitment to the incentive structure, but eligibility rules have become stricter. Anyone considering relocation or business formation under Act 60 should carefully review the latest requirements and legislative updates before applying.