Puerto Rico’s Act 60 2025 legislative updates are reshaping the investment landscape, creating fresh opportunities and introducing new obligations for investors. The recently proposed measures by Governor Jenniffer González extend Act 60’s attractive incentives through 2055 while introducing significant changes aimed at fairness and local equity. As a high-net-worth individual considering Puerto Rico’s investment environment, understanding these shifts is crucial for strategic financial planning and compliance.

In this blog, we’ll explore these critical updates, clarify their implications, and highlight strategic opportunities available for investors navigating this evolving landscape.

Understanding Puerto Rico’s Act 60 and Recent Changes

Originally introduced in 2019, Act 60 consolidated previous incentives under Laws 20 and 22 into one unified framework. This law aims to attract businesses and wealthy individuals to Puerto Rico, offering substantial tax advantages such as a 4% corporate tax rate and previously, a 0% individual rate on capital gains, dividends, and interest.

Now, substantial changes under recent legislative initiatives significantly impact future applicants and broaden the incentives for long-term Puerto Rican residents.

Key Highlights of Act 60 2025 Updates: A Bifurcated Approach

The newly introduced House Bill A-051 strategically splits investor incentives into two distinct paths, depending on application timing:

1. Applicants Before December 31, 2025

• Investors who submit decree applications on or before December 31, 2025, remain eligible for the current 0% tax rate on Puerto Rico-sourced capital gains, dividends, and interest income.
• This grandfathering clause ensures policy stability, providing investors ample incentive to act within the coming year.

2. Applicants Starting January 1, 2026

• A new 4% tax rate applies to interest, dividends, and capital gains for all acquisitions made after establishing residency in Puerto Rico.
• A residency requirement stipulates a six-year non-residency period before eligibility.
• The effectiveness of these incentives has been extended until 2055, providing long-term planning certainty.

This shift from 0% to 4% reflects an intentional policy recalibration. As expressed by Governor González, this change intends to modernize Puerto Rico’s tax structure, balance fairness between local residents and newly arrived investors, and sustain the island’s economic attractiveness.

Leveling the Playing Field for Local Investors

A complementary measure aims at creating equity between foreign decree holders and long-standing local investors:

Starting in the 2025 tax year, Puerto Rico residents—including individuals, estates, and trusts—can elect a special 4% tax rate. This applies to locally sourced dividends, interest, and long-term capital gains.

This elective rate mirrors benefits previously exclusive to decree holders. It promotes fairer distribution of incentives within the local community.

Those choosing this special rate will be exempt from alternative minimum tax and certain tax credits, simplifying compliance.

This initiative strategically democratizes economic opportunities. It fosters local capital retention and investment, encouraging broader participation in Puerto Rico’s growth.

Broader Economic Impact and Additional Incentives

Beyond these significant shifts, the new legislative package includes complementary tax simplifications and incentives that benefit various sectors:

• Non-profits: Streamlined exemptions aligning with federal processes.
• Municipal Tax System (IVU): Integration with the digital Unified Internal Revenue System (SURI), simplifying compliance.
• Retirement and Education Savings: Increased deduction limits for IRA contributions (from $5,000 to $7,000). Educational savings (from $500 to $1,000), promoting long-term financial security.
• Inventory Tax Exemptions: Elimination of taxes on prescription medications, enhancing healthcare access and affordability.
• Agriculture: Strengthened and clarified incentives for certified local farmers to bolster agricultural productivity.

Governor González asserts these changes collectively promote transparency, modernity, and equity in Puerto Rico’s fiscal landscape, benefiting local residents, expatriates, and new investors alike.

Strategic Considerations for Investors

Given the latest legislative changes, investors should:

• Evaluate Timeliness: Consider acting swiftly if interested in securing the existing 0% tax rate incentives available until December 31, 2025.
• Assess Long-term Strategies: Analyze the long-term implications of the new 4% rate to recalibrate financial planning and investment strategies accordingly.
• Explore Local Investment Opportunities: The leveling of benefits opens fresh opportunities for residents already established on the island. Investors can now confidently engage more deeply in local markets, contributing positively to the community while enjoying significant tax advantages.

Conclusion

Puerto Rico’s recent updates to Act 60 reflect a thoughtful recalibration. They balance incentives for foreign capital with support for local investors. As stakeholders evaluate the 2025 Act 60 updates, these reforms clearly reshape the island’s global competitive edge. By understanding and strategically aligning with these changes, you can leverage Puerto Rico’s unique investment opportunities. This approach enables you to contribute positively to the island’s broader economic growth.

To navigate the complexities and opportunities introduced by the updated Act 60, consider scheduling a consultation with our experienced advisors at Tiempo Capital. Our team can help you tailor an investment strategy aligned with these new incentives, ensuring your financial goals are met with precision and confidence.

Sources:

El Nuevo Día (April 2025) Aplicarán responsabilidad contributiva de 4% a nuevos beneficiarios de la Ley 60, que se extenderá hasta 2055, taken from https://www.elnuevodia.com/noticias/gobierno/notas/aplicaran-responsabilidad-contributiva-de-4-a-nuevos-beneficiarios-de-la-ley-60-que-se-extendera-hasta-2055/

El Nuevo Día (April 2025) Estas son las 13 medidas que buscan simplificar los procesos contributivos en Puerto Rico, taken from https://www.elnuevodia.com/noticias/gobierno/notas/estas-son-las-13-medidas-contributivas-que-buscan-simplificar-los-procesos-contributivos-en-puerto-rico/

CLB Tax LLC (April 2025) Puerto Rico’s New Incentives Bills: A Strategic Split—And a Push Toward Local Equity, taken from https://www.clbtax.com/post/puerto-rico-s-new-incentives-bills-a-strategic-split-and-a-push-toward-local-equity?utm_source=linkedin&utm_medium=blog.post-promoter&utm_campaign=3876e236-d9ce-43f9-b2a6-2fe089d04662

Primera Hora (April 2025) Jenniffer González presenta la primera parte de la reforma contributiva, taken from https://www.primerahora.com/noticias/gobierno-politica/notas/jenniffer-gonzalez-presenta-la-primera-parte-de-la-reforma-contributiva/

Sabalier Law (August 2030) Incentivos Fiscales Actualizados de Puerto Rico, taken from https://www.sabalierlaw.com/es/blog/incentivos-fiscales-actualizados-de-puerto-rico/