Panama Tax Calculator (2026)
Income tax rates and take-home pay for Panama
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Panama Income Tax Brackets (2025)
| Bracket | Income Range | Rate |
|---|---|---|
| Exemption bracket | $0 - $11,000 | 0.0% |
| 15% bracket | $11,000 - $50,000 | 15.0% |
| 25% bracket | $50,000+ | 25.0% |
Social Security (Employee)
| Bracket | Income Range | Rate |
|---|---|---|
| Employee social security contribution | $0+ | 9.8% |
Educational Insurance (Employee)
| Bracket | Income Range | Rate |
|---|---|---|
| Employee educational insurance contribution | $0+ | 1.3% |
Key Facts
Tax Year
2025
Currency
USD
Top Rate
25.0%
Brackets
3 brackets
Tax-Free Threshold
$11,000
Social Contributions
2 items
Assumptions
- · Panama uses a territorial tax system; only Panamanian-source income is taxed.
- · Representative model assumes a single resident employee with full-year employment.
- · Social security rates reflect 2025 updates (employee 9.75%, employer 13.25%).
- · Educational insurance tax included as mandatory employee contribution (1.25%).
- · Personal exemption of USD 800 applies only to married individuals; single person model uses no relief.
- · Personal deductions (mortgage interest, medical, education, charitable, retirement contributions) are not included in this standardized calculator model.
- · Capital gains tax, property tax, and consumption taxes are not included as they apply to specific transactions, not routine salary income.
- · No local income taxes exist in Panama.
Frequently asked questions
Do I pay income tax on money I earn outside Panama?
No. Panama uses a territorial tax system, which means only income earned from Panamanian sources is subject to income tax. If you're a remote worker earning money from clients outside Panama, that income is generally not taxed by the Panamanian government, making it an attractive option for digital nomads and expats.
What are Panama's income tax brackets for 2025?
Panama has three income tax brackets. Income up to USD 11,000 is tax-free. Income between USD 11,000 and USD 50,000 is taxed at 15%. Income above USD 50,000 is taxed at 25%. This progressive system means your tax rate increases only on income that falls into higher brackets.
What mandatory contributions do I need to pay as an employee in Panama?
As an employee in Panama, you contribute 9.75% for Social Security and 1.25% for Educational Insurance, both calculated on your gross income. These contributions are mandatory and are not tax-deductible, so they reduce your take-home pay in addition to any income tax owed.
Is there a personal exemption or deduction I can claim?
The standard calculator model does not include personal deductions such as mortgage interest, medical expenses, or charitable contributions, as these vary significantly by individual circumstance. A personal exemption of USD 800 applies only to married individuals under Panamanian tax law, but this simplified calculator uses a standard model for comparison purposes.
Are there local or regional income taxes in Panama?
No. Panama has no local or regional income taxes. The income tax system is uniform across the entire country, so your tax liability depends only on the national brackets and your residency status, not on which province or municipality you live in.
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