Puerto Rico’s Act 60, a critical tax incentive program for both investors and businesses, may be evolving in 2025 with recent legislative proposals from the Puerto Rico government. With significant changes in the legislative landscape, these potential updates bring fresh opportunities—and new responsibilities—for high-net-worth individuals planning to relocate or expand their investments in Puerto Rico.
Governor Jenniffer González’s recent legislative proposals may extend the attractive benefits of Act 60 through 2055, while also introducing updates aimed at increasing fairness and equity. As of the date of this newsletter, nothing has been officially passed into law.
In this newsletter, we’ll break down what is included in the proposed legislation, including key updates, their implications for your tax strategy, and the new opportunities available as Puerto Rico’s investment environment continues to evolve.
Act 60 2025: What’s New for Investors?
Puerto Rico’s Act 60, which consolidated previous laws (Laws 20 and 22), has always been a powerful tool for attracting investors with generous tax benefits. Originally designed to offer a 0% tax rate on capital gains, dividends, and interest, recent changes may recalibrate the landscape—creating a split between current and future applicants.
1. Timing Your Move
In the Governor’s proposal, Puerto Rico is offering two distinct tax paths for new investors based on the time of your move
- For Applicants Before December 31, 2025:
If you apply for Act 60 before the year’s end, you’ll be grandfathered in under the current 0% tax rate for Puerto Rico-sourced capital gains, dividends, and interest. This is a great opportunity to secure these favorable tax conditions. - For Applicants After January 1, 2026:
In the Governor’s proposal, a new 4% tax rate will apply to interest, dividends, and capital gains for all acquisitions made after establishing residency. Additionally, this proposal stipulates a six-year non-residency period before eligibility. While this represents a shift from 0% to 4%, these incentives will be extended through 2055, providing long-term planning stability, if the proposal goes through.
2. Changes for Local Investors
In addition to providing benefits for new arrivals, the potential reforms promote equity among local Puerto Rican investors. If the legislation passes, Puerto Rico residents—including individuals, estates, and trusts—can elect a special 4% tax rate on locally sourced dividends, interest, and long-term capital gains.
This initiative mirrors benefits previously reserved for decree holders, providing local investors with a competitive edge and incentivizing greater investment within the island. Investors who choose this rate will be exempt from alternative minimum tax and certain tax credits, therefore simplifying compliance.
3. Additional Legislative Updates
The recent legislative package includes several measures designed to bolster Puerto Rico’s economy:
- Agriculture: Enhanced incentives for local farmers, aiming to boost agricultural productivity and promote sustainability.
- Healthcare: Removal of taxes on prescription medications, making healthcare more accessible to residents.
- Municipal Tax System (IVU): Improved integration with the Unified Internal Revenue System (SURI), streamlining tax management for businesses.
- Retirement & Education Savings: Higher deduction limits for IRA and educational savings, supporting long-term financial stability.
- Non-profit Organizations: Simplified tax exemptions, now better aligned with federal processes for more efficient compliance.
Next Steps for Investors & Navigating the Evolving Landscape
As Puerto Rico continues to adjust its tax landscape, here are some key considerations for your investment strategy:
- Act Quickly: If you’re planning to secure the 0% tax rate on capital gains, dividends, and interest, it’s crucial to apply before December 31, 2025.
- Reevaluate Long-Term Goals: With the shift to a 4% tax rate for new applicants, it’s time to assess how this change impacts your long-term financial planning and investment strategies.
Puerto Rico’s proposed 2025 Act 60 updates reflect a thoughtful approach to balancing investment incentives for newcomers with fairness for local residents. The extended tax benefits through 2055, along with the new 4% tax rate for certain income types, provide ample opportunities for long-term financial planning.
If you’re considering relocating or expanding your investments in Puerto Rico, it’s essential to stay informed and strategic. Our team is here to guide you through the complexities of the new legislative proposal and help you create a plan that aligns with your financial goals.