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 all my income if I move to Panama?
No, Panama uses a territorial tax system, which means only income earned from Panamanian sources is taxed. If you're a remote worker earning income from outside Panama, that foreign-source income is generally not subject to Panama income tax, making it an attractive option for expats and digital nomads.
What are Panama's income tax brackets and rates?
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 burden increases only on income that falls into higher brackets.
What mandatory deductions will I see from my salary in Panama?
As an employee in Panama, you'll have two mandatory contributions deducted from your gross salary: Social Security at 9.75% and Educational Insurance at 1.25%. These are employee contributions and total 11% of your gross income, and they are not deductible from your taxable income for income tax purposes.
Are there any income tax exemptions or relief available in Panama?
Panama offers a personal exemption of USD 800, but this applies only to married individuals. Single employees do not receive a personal exemption in the standard calculator model. Additionally, the country allows personal deductions for items like mortgage interest, medical expenses, education, charitable donations, and retirement contributions, though these are not included in this standardized calculator.
Does Panama have state or local income taxes?
No, Panama has no state or local income taxes. The national income tax system is the only income tax you'll pay, which simplifies tax planning for residents and workers in the country.
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