March 2026 Update
Puerto Rico has approved Act No. 38-2026, introducing significant amendments to the Resident Individual Investor Program under the Puerto Rico Incentives Code (Act 60-2019).
The new legislation modifies tax rates for future investor residents, establishes additional residency requirements, and extends the program through 2055.
What Changed?
New 4% Tax Rate for Future Investor Residents
One of the most important changes is the introduction of a 4% preferential income tax rate on:
• Interest income
• Dividend income
• Capital gains generated after becoming a Puerto Rico resident
This new tax treatment applies to individuals who submit their Investor Resident application on or after January 1, 2027.
Current Decree Holders Remain Protected
The legislation preserves the rights of individuals who obtained—or applied for—a decree on or before December 31, 2026.
These investors generally continue to benefit from the existing tax structure, including:
• 100% exemption on Puerto Rico-source interest and dividends through December 31, 2035
• 100% exemption on post-residency capital gains recognized before January 1, 2036
This grandfathering provision provides certainty for existing investors and protects previously acquired rights.
New Residency Requirement
For applications submitted after December 31, 2026, applicants must demonstrate that they were not residents of Puerto Rico for at least six years prior to relocating to the island.
This requirement is intended to ensure that the program continues to attract new capital and investment from individuals relocating from outside Puerto Rico.
Program Extended Until 2055
Previously, the Resident Individual Investor Program was scheduled to expire in 2035.
Act 38-2026 extends the program through December 31, 2055, providing long-term certainty for prospective investors and reinforcing Puerto Rico’s commitment to attracting investment and economic development.
Real Estate Ownership Requirements Strengthened
Future investor residents applying after January 1, 2027, must continue to acquire a principal residence in Puerto Rico and provide evidence that ownership is properly recorded (or pending registration) in the Puerto Rico Property Registry.
The property may be owned individually, jointly with a spouse, or through a qualifying trust.
Why This Matters
According to the legislative findings supporting the bill, Puerto Rico’s Export Services and Resident Investor programs have contributed significantly to the local economy, generating:
• More than 75,000 direct and indirect jobs
• Approximately $650 million in tax revenues
• More than $10 million annually in charitable donations
The government concluded that a modest increase from 0% to 4% would maintain Puerto Rico’s competitiveness while generating additional tax revenue and supporting long-term economic growth.
Key Takeaway
Act 38-2026 represents the most significant update to Puerto Rico’s Resident Individual Investor Program in years. While current decree holders retain their existing benefits, future applicants should expect a 4% tax rate on investment income and capital gains, additional residency requirements, and a program framework that now extends through 2055.
For investors considering relocation to Puerto Rico, understanding the timing of an application and the new rules will be essential when evaluating tax planning opportunities.
Need guidance on how these changes may affect your situation? Contact Accountax Partners to discuss your Puerto Rico tax planning strategy.