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 have to pay income tax on money I earn outside of Panama?
No, Panama uses a territorial tax system, which means only income earned from Panamanian sources is subject to tax. If you're a remote worker earning money from clients outside Panama, that income is generally not taxable in Panama, making it an attractive location for digital nomads and international professionals.
What are the income tax brackets in Panama?
Panama has three income tax brackets: income up to USD 11,000 is tax-free, income from USD 11,000 to USD 50,000 is taxed at 15%, and income above USD 50,000 is taxed at 25%. This progressive system means your tax rate increases only on income that falls into each higher bracket.
What social security contributions do I need to pay as an employee?
As an employee in Panama, you contribute 9.75% of your gross income to social security and an additional 1.25% for educational insurance, both deducted from your salary. Your employer also contributes separately to these programs, but those employer contributions do not affect your take-home pay calculation.
Are there any deductions or exemptions I can claim on my Panama income tax?
The standardized calculator model does not include personal deductions such as mortgage interest, medical expenses, education costs, or charitable donations, though these may be available depending on your specific circumstances. For detailed information about deductions you personally qualify for, it's best to consult with a local tax advisor or the Panama tax authority.
Do I need to pay state or local income taxes in Panama?
No, Panama has no state or local income taxes to worry about. Your only income tax obligations are the national income tax brackets plus the mandatory social security and educational insurance contributions deducted from your salary.
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