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 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 from clients or employers outside Panama, that foreign-source income is generally not taxed by Panama, making it an attractive destination for digital nomads and expats.
What are Panama's income tax brackets?
Panama has three income tax brackets: the first 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 means you only start paying income tax once you exceed USD 11,000 in annual earnings.
How much do I pay in social security and other mandatory contributions?
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 you owe.
What deductions can I claim to reduce my taxable income?
The standardized tax calculator does not include personal deductions such as mortgage interest, medical expenses, education costs, charitable donations, or retirement contributions. However, these deductions may be available when filing your actual tax return, so it's worth consulting with a local tax professional to understand what you can claim based on your specific situation.
Are there any state or local taxes I need to pay in Panama?
No, Panama has no state or local income taxes. Your only income tax obligations are to the national government through the three-bracket system, plus the mandatory social security and educational insurance contributions.
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