How this calculator works
In your state. It computes 2026 federal income tax on your interest (as ordinary income) and on qualified dividends and long-term capital gains (at the 0%, 15% and 20% rates), with the standard deduction, plus the 3.8% net investment income tax once income passes $200,000 (single) or $250,000 (married filing jointly). It then adds state income tax using each state's latest published brackets, including special capital gains rules: states with no income tax (such as Florida or Texas), partial exclusions (such as Arizona, South Carolina or Wisconsin), Washington's capital gains tax, and the special rates in Hawaii, Massachusetts, Maryland, Minnesota and Montana. If you choose New York, you can add New York City income tax.
In Puerto Rico with a decree. It applies the Resident Individual Investor rate to capital gains that accrued after your move and to dividends and interest: 0% if the application is filed by December 31, 2026, and 4% if it is filed on or after January 1, 2027, under Act 38-2026. As a bona fide Puerto Rico resident you exclude Puerto Rico-source income from your federal return (Internal Revenue Code Section 933), but dividends and interest from U.S. companies and banks remain U.S.-source and are taxed federally; the calculator handles them according to the option you choose. Finally, it adds the decree's annual costs: the $10,000 donation and the $5,000 annual report fee.
A single filer in New York with $500,000 of long-term capital gains, $60,000 of qualified dividends and $40,000 of interest, all from U.S. sources:
- In New York they would pay about $137,845: $84,708 of federal income tax, $15,200 of the 3.8% tax and $37,937 of state tax.
- In Puerto Rico, with a decree applied for in 2027 or later (4%), they would pay about $46,788: $24,000 at 4%, $7,788 of federal tax on the U.S.-source dividends and interest, and $15,000 of annual decree costs.
- Estimated savings: about $91,057 a year. With a decree applied for by December 31, 2026 (0%), savings rise to about $115,057.
What the calculator does not take into account
- Gains built up before the move. If you sell within 10 years of becoming a resident, pre-move appreciation is taxed under regular rules; after 10 years, at 5% in Puerto Rico. Federal sourcing rules (Section 937) also apply.
- Salaries and business income. These are taxed at regular Puerto Rico rates or under other decrees, such as the export services decree.
- One-time and compliance costs: the $5,000 application fee, buying a residence within two years and the CPA agreed-upon procedures report that accompanies each annual report.
- Local taxes other than New York City, credits, itemized deductions, the alternative minimum tax and how your current state treats your departure (some states scrutinize these moves closely).
- Some states have not yet published 2026 brackets; in that case the latest are used and the calculator says so.
To understand the decree's requirements, read the Resident Individual Investor guide and the Act 60 guide. If you are weighing a move, see moving to or from Puerto Rico.
Frequently asked questions
Which date decides between the 0% and 4% rate?
The date the decree application is filed on DDEC's incentives portal, not the move date or the approval date. Applications filed by December 31, 2026 keep 0% through 2035; applications filed on or after January 1, 2027 pay 4% through 2055.
Do I stop paying federal tax if I move to Puerto Rico?
Not entirely. As a bona fide resident you exclude Puerto Rico-source income, but you still pay federal tax on U.S.-source income, such as dividends from U.S. companies and interest from U.S. banks.
How much does it cost to keep the decree?
At least $15,000 a year: the $10,000 annual donation to nonprofits and the $5,000 annual report fee, plus the CPA report. Applying costs $5,000, and accepting the decree costs $100.
Can this calculator tell me whether I should move?
It is a starting point. The decision depends on your bona fide residence, where your investments are sourced, your current state and your family situation. Before deciding, talk to a CPA or an attorney experienced with Act 60.
Sources
- Oficina de Gerencia y Presupuesto, "Ley Núm. 38-2026". bvirtualogp.pr.gov
- DDEC, "Informative Bulletin 2026-004". docs.pr.gov
- DDEC, "Reglamento 9414, enmienda al Reglamento de Incentivos 9248". docs.pr.gov
- IRS, "Revenue Procedure 2025-32". irs.gov
- IRS, "Publication 1321, Special Instructions for Bona Fide Residents of Puerto Rico". irs.gov
- Tax Foundation, "State Individual Income Tax Rates and Brackets, 2026". taxfoundation.org
787TAX is an independent guide. It is not Puerto Rico's Departamento de Hacienda, the CRIM or the IRS. This page is general information, not tax or legal advice. Example figures are hypothetical. Found an error? Tell us.
