Technical article

Act 60 and the Retiree

They want to know what the law says and what it does not say.

By Neil Solomon · 5 min read

Picture a couple named Mark and Elena. Both are 58. Mark sold a small business and now lives on investments. They heard that "Act 60" lowers taxes for people who move to Puerto Rico. They want to know what the law says and what it does not say.

I went to the official pages. The law was changed on 10 March 2026, and I read the text of that change, so the rates below are the current ones.

What Act 60 is

Act 60 of 2019 is the Puerto Rico Incentives Code. It covers many programs. The one for individuals who move to the island is called the "Individuo Residente Inversionista," in English the Resident Individual Investor. The code defines this person as "un individuo elegible para obtener los beneficios de las Secciones 2022.01 y 2022.02 de este Código." The benefits sit in those two sections. Act 38 of 10 March 2026 rewrote both, and the text certified by the Department of State on 11 March 2026 is what I read.

Who qualifies

From the code's definitions section (revised 16 July 2026):

The English copy of the code on the same government site shows the older date of 31 December 2035. Act 38 of 2026 is the newer text, so the later date applies and the English copy has not yet caught up. For applications sent after 31 December 2026 the same act asks the person to show they were not a resident for at least six years before moving.

The rates, in two groups

The act sets different rates depending on when the application for the decree is sent. The text is Sections 2022.01 and 2022.02 of the Incentives Code.

My arithmetic: US$100,000 of dividends a year comes to US$0 under the earlier group and US$4,000 under the later one. For a decree already held or applied for by the end of 2026, the act lets the holder ask for a modification to the new terms if they want them (Section 6020.03).

A home on the island

Section 6020.10 asks the investor to show a purchase, within two years after the decree, of real property in Puerto Rico from an unrelated seller, to be the main home, and to keep full ownership of it during the decree. For applications from 1 January 2027 the proof must show full ownership registered, or pending registration, in the Property Registry in the name of the investor, the investor and spouse together, or a trust described in Section 2022.07.

What it asks each year

The Economic Development and Commerce department (DDEC) published a circular on 12 January 2026. It says Section 6020.10(b) of the code requires an annual donation "de al menos" (at least) US$10,000 to nonprofit groups. The split in the circular:

The circular says that starting in 2026 the incentives office will require proof of the fund gift. For 2025 and earlier it will not penalize an investor who gave the US$10,000 with at least US$5,000 to listed groups.

What stays federal

Act 60 is a Puerto Rico law. The IRS decides the federal side. Section 933 of the federal tax code excludes "income derived from sources within Puerto Rico" for a bona fide resident of Puerto Rico for the entire year, with an exception for pay as a US government employee. The IRS says in Publication 1321 (October 2025) that Social Security is "U.S. Source income by definition" and a bona fide resident with such income "must file a U.S. Federal income tax return." Publication 570 describes the three tests for being a bona fide resident: presence, tax home and closer connection.

So a decree from Puerto Rico does not change where income is sourced for the IRS. No official page links the two in one place, which is why the federal part above stays separate.

What this article leaves for another day

• Any decree application fee and the annual fee. They are set by the department's regulations, and the application starts from the DDEC incentives portal, applications@ddec.pr.gov, (787) 764-6363.
• Whether Hacienda gives a single summary for retirees. The Hacienda pages I read do not.