By Maria Isabel Santiago, Esq.
Puerto Rico has long drawn investors with some of the most favorable tax treatment available under U.S. jurisdiction. Recent legislation, however, has reshaped the landscape for those considering a move. New rules signed into law in 2026 preserve the program's appeal while introducing meaningful changes for future applicants.
Anyone weighing relocation should understand the Act 60 Puerto Rico 2026 updates before deciding. This guide breaks down what changed, what remains, and why timing now matters more than ever.
Please note: the following is general information, not legal or tax advice. Every situation differs, and I always recommend consulting qualified tax and legal counsel before acting.
Key Takeaways
- New Rate: The 0% investor rate becomes 4% for later applicants.
- Deadline: Applications by year-end 2026 retain current terms.
- Extension: The program now runs through 2055.
- New Rules: Future applicants face added residency requirements.
Understanding What Act 60 Offers
A grasp of the Act 60 Puerto Rico 2026 updates begins with the program itself. Act 60-2019, the Puerto Rico Incentives Code, consolidated earlier laws, including the well-known Act 20 and Act 22, into a single statute.
- Individual Incentive: A 0% rate on qualifying passive income historically applied.
- Business Incentive: Export Services businesses enjoy a 4% corporate rate.
- Residency Requirement: Benefits require bona fide Puerto Rico residency.
- Consolidated Code: Act 60 unified earlier incentive laws in 2019.
The Individual Resident Investor program, formerly Act 22, has historically granted a 0% tax rate on interest, dividends, and post-residency capital gains for qualifying bona fide residents. Separately, the Export Services program offers businesses a preferential 4% corporate rate. Both have made the island a genuine draw for investors and entrepreneurs.
The Central Change: A New Tax Rate
At the heart of the Act 60 Puerto Rico 2026 updates is a new tax rate for individual investors. Governor Jenniffer González signed Act 38-2026 into law on March 10, 2026, amending the Individual Resident Investor program.
- New 4% Rate: Later applicants face a 4% rate on passive income.
- Applies to: The rate covers interest, dividends, and capital gains.
- Effective Date: The change applies to applications after 2026.
- Still Competitive: A 4% rate remains lower than most U.S. alternatives.
Under the new framework, the historically 0% rate on interest, dividends, and post-residency capital gains becomes 4% for individuals who apply on or after January 1, 2027. The prior 0% rate is no longer available to new applicants after that date. Even at 4%, the rate remains well below what most U.S. jurisdictions impose on investment income.
Why the Application Deadline Matters
A critical element of the Act 60 Puerto Rico 2026 updates is the timing of applications. The deadline, rather than the move date, determines which terms apply.
- Grandfathering: Applications by year-end 2026 keep the 0% structure.
- The Cutoff: Applications after 2026 face the new 4% rate.
- Deadline Focus: The application date, not the move date, controls.
- Narrowing Window: The most favorable terms expire at year-end 2026.
Individuals who submit a complete Individual Resident Investor application on or before December 31, 2026, generally retain the current, grandfathered 0% structure. Those who apply on or after January 1, 2027, fall under the new 4% regime. Investors weighing a move therefore face a narrowing window to secure the most favorable terms.
Extended Program Life and New Requirements
Beyond the rate, the Act 60 Puerto Rico 2026 updates bring both good news and added obligations. The legislation extends the program's sunset from 2036 to December 31, 2055, offering long-term certainty.
- Extended Sunset: The program now runs through 2055.
- Prior Residency: New applicants must show six years of non-residency.
- Added Compliance: Modified eligibility conditions apply to future applicants.
- Long-Term Certainty: The extension supports longer planning horizons.
New requirements accompany that extension. Applicants after 2026 must demonstrate they were not a Puerto Rico resident for at least six years before relocating, an increase from prior rules. Additional compliance and eligibility conditions also apply. Investors should weigh these obligations alongside the benefits.
What Remains Unchanged
An important part of the Act 60 Puerto Rico 2026 updates is what stayed the same. The changes target the individual investor program specifically, leaving other incentives intact.
- Business Programs: Export Services and other business incentives continue.
- Corporate Rate: The 4% rate on qualifying export income remains.
- Existing Decrees: Current decree holders keep their benefits.
- Dividend Exemption: The 100% business dividend exemption stands.
Business programs remain unaffected, including the Export Services program, manufacturing incentives, and tourism incentives. The 4% corporate rate on qualifying export income and the 100% dividend exemption for businesses both continue. Existing decree holders also retain their current benefits. Continuity of this kind preserves much of the program's appeal.
FAQs
What is the biggest change under Act 38-2026?
The most significant change raises the Individual Resident Investor rate on interest, dividends, and post-residency capital gains from 0% to 4% for those who apply on or after January 1, 2027. Applications submitted by December 31, 2026, generally retain the 0% structure.
Do existing Act 60 decree holders lose their benefits?
No, existing decree holders generally retain their current benefits under the grandfathered terms. The new 4% rate and added requirements apply primarily to future applicants after 2026.
Are Puerto Rico's business incentives affected?
The 2026 changes target the individual investor program, leaving business incentives unaffected. The Export Services 4% corporate rate and the 100% dividend exemption for businesses both remain in place.
Contact Maria Isabel Santiago Today
The Act 60 Puerto Rico 2026 updates preserve the island's competitive edge while introducing a 4% rate, a 2055 extension, and new requirements for future applicants. Investors considering a move face a genuinely narrowing window to secure the most favorable terms before year-end 2026.
As an attorney, I always recommend working closely with qualified tax and legal advisors to evaluate your specific circumstances before acting. Reach out to me, Maria Isabel Santiago, Esq., to discuss how the current landscape and the island's real estate market fit your plans within this evolving context.
As an attorney, I always recommend working closely with qualified tax and legal advisors to evaluate your specific circumstances before acting. Reach out to me, Maria Isabel Santiago, Esq., to discuss how the current landscape and the island's real estate market fit your plans within this evolving context.
