Taxes
Panama — Personal Tax Overview
Panama runs a territorial tax system: only Panamanian-source income is taxed, and this applies regardless of residency status, with no exception for length of residence. Foreign-sourced income — salaries from foreign employers, offshore investment returns, foreign pensions, and foreign rental income — is not taxed in Panama at all.
VerifiedCommunity sourcePwC Worldwide Tax Summaries — Panama individual income tax, cross-checked against relocation tax guidesLast reviewed: 2026-07-30
Key facts
- Panama's personal income tax is progressive and capped at a top rate of 25%.
- Cited bracket structure: 0% on income up to roughly $11,000/year, rising to 25% above roughly $50,000/year — confirm exact current thresholds with the Dirección General de Ingresos (DGI) before relying on precise cutoffs.
- Foreign-source income (salary from a non-Panamanian employer, offshore dividends/interest/capital gains, foreign pensions, foreign rental income) is fully exempt from Panamanian income tax, with no cap and no distinction by how long the person has lived in Panama.
- Non-residents are taxed only on Panamanian-source income, with tax withheld at source by the payer.