Puerto Rico Act 60: the Resident Individual Investor tax decree

The Resident Individual Investor regime was introduced by Act 22-2012 and consolidated in Section 2021.01 et seq. of the Puerto Rico Incentives Code (Act 60-2019). Act 38-2026, enacted on 10 March 2026 and clarified by DDEC Informative Bulletin 2026-004 of 24 April 2026, extends the programme to 31 December 2055. Applications received on the Incentives Portal by 11:59 pm on 31 December 2026 are processed under the existing rules: generally 0% Puerto Rico tax on interest, dividends and capital gains accrued after becoming resident, with a decree expiring on 31 December 2035. Applications filed from 1 January 2027 receive a fixed 4% rate on the same income until 31 December 2055. Gains on appreciation that accrued before the move are taxed at 5% if recognised after ten years of residence.

The decree is meaningful only for someone who genuinely lives in Puerto Rico. For US federal purposes, a US citizen must be a bona fide resident under IRC §937: broadly, presence of at least 183 days in the tax year (or one of the alternative presence tests), no tax home outside Puerto Rico, and no closer connection to the United States or another country. A bona fide resident excludes Puerto Rico-source income from federal gross income under IRC §933, but remains taxable federally on US-source income, such as most dividends paid by US corporations. Gains on assets held before the move may be treated as US-source to the extent of pre-move appreciation if recognised within ten years. Form 8898 must be filed in the year residence changes where worldwide income exceeds US$75,000, and the IRS runs an active compliance campaign on Act 60 relocations.

Annual obligations are substantive. The holder must donate at least US$10,000 each year to Puerto Rico non-profits: under DDEC Circular Letter 2026-001, US$5,000 to listed child-poverty organisations, US$2,500 to the Social Equality Special Fund and US$2,500 to other eligible entities. Within two years of the decree the holder must buy a primary residence in Puerto Rico from an unrelated seller and keep it for the decree's term; for applications filed from 2027 it must be held directly, jointly with a spouse or through a grantor trust and recorded in the Property Registry. An annual report with evidence of compliance is filed with the OIN.

The decree does not create a right to live in Puerto Rico. US citizens may move freely; other nationals must hold a US immigration status, typically a green card such as the EB-5 investor route, and any later citizenship is US citizenship obtained under federal naturalisation law. Family members follow their own immigration and tax position, so spouses and adult children should be assessed individually.