Puerto Rico’s New Incentives Bills: A Strategic Split—And a Push Toward Local Equity

Puerto Rico continues to refine its economic strategy through targeted tax incentives. A new legislative measure—House Bill A-051, along with a companion measure to amend the Puerto Rico Internal Revenue Code—introduces a two-pronged approach: one for attracting new resident investors and another for promoting fairness and opportunity for long-term Puerto Rico residents.

These bills reflect a clear policy vision: not only to attract outside capital but also to retain and incentivize local investment—ensuring the benefits of economic development are shared more broadly across the Island.

Part I: Bifurcation of Resident Investor Incentives (House Bill A-051)

1. Applications Submitted on or Before December 31, 2025

For individuals who submit their Resident Investor decree applications on or before December 31, 2025, the current rules under Law 60-2019 continue to apply:

• 0% tax rate on Puerto Rico-sourced interest, dividends, and post-residence capital gains.

This "grandfathering" ensures policy stability for those applying within this year. Therefore, if you’re considering relocating to Puerto Rico, applying before December 31, 2025, locks in the most favorable tax treatment under current rules.

2. Applications Submitted On or After January 1, 2026

Starting in 2026, newly relocated investors will be subject to the following changes:

• A 4% tax rate on interest, dividends, and capital gains derived from post-residency acquisitions.

• A six-year non-residency rule will apply before qualifying.

  
  

The bill also extends the effectiveness of the Resident Investor program to 2055.

Part II: Leveling the Playing Field for Puerto Rico Residents

While House Bill A-051 addresses incentives for future residents, a separate bill proposes a long-awaited correction: equity for Puerto Rico residents who already live and invest on the Island.

This new legislative initiative introduces a voluntary special 4% tax rate on interest, dividends, and long-term capital gains derived from Puerto Rico sources—mirroring the benefits offered to decree holders.

• Beginning with tax years after December 31, 2024, any individual, estate, or trust may elect to pay a 4% special tax rate on:

  • Interest and dividends, including those from mutual funds, international banking entities, and financial institutions regulated under Puerto Rico’s financial center laws.

  • Net long-term capital gains from the sale of securities or other defined assets, as long as the income is sourced to Puerto Rico.

• This is a voluntary election made through the annual income tax return.

• Taxpayers opting for this special rate:

  • Will not be subject to the alternative basic tax (Contribución Básica Alterna).

  • May not claim certain tax credits, including the credit under Section 1051.01.

At CLB Tax, we will continue to monitor the development of these bills and their potential impact. This blog is intended for informational purposes only and does not constitute tax advice. For guidance on your specific situation, please contact us.