Is Act 60 Still Active in Puerto Rico? What Changes in 2027

By Daniel Hiltzik, CPA · Updated August 13, 2026

At a glance

The deadline is real, but it is not mainly about the rate. File on or before December 31, 2026 and qualifying investment income is taxed by Puerto Rico at 0% — through the end of 2035. File from January 1, 2027 and the rate is 4%, running twenty years longer.
The 0% does not step down to 4% when it ends. It ends. Income recognized after December 31, 2035 goes back to ordinary Puerto Rico rates unless you have taken action. This is the single most misunderstood part of the change.
A new eligibility rule arrives with the new year. File from January 1, 2027 and you must show you were not a Puerto Rico resident for at least six years before the day you move. If you have lived on the island recently, filing by December 31 is what lets you skip that test instead of waiting it out.
“Filed” has a specific meaning. An application missing documents or with the fee unpaid is not treated as filed at all. Several of those documents come from government agencies and take weeks to obtain.
Moving does not erase the gain you already have. A decree changes the tax on growth from the day you become a resident forward. There is a worked example below.
Puerto Rico is not the IRS. A Puerto Rico decree does not by itself change what you owe the federal government on gains that built up before you moved.

Is Act 60 still active? Yes. Puerto Rico Act 60 is in force and accepting applications. It has not been repealed and it is not ending. What changes is the terms: Act 38-2026 replaces the five-year residency requirement with a six-year one and moves the capital gains rate from 0% to 4%, for decrees applied for on or after January 1, 2027. An application filed by December 31, 2026 sits on the current terms.

There is a real deadline coming, and most of what is being written about it is aimed at the wrong thing. The headline everywhere is 0% now, 4% later. That is true, and for a lot of people it is not the part that matters.

What matters more is that on January 1, 2027 a new eligibility rule takes effect that will disqualify a specific group of people entirely — no rate to negotiate, no worse deal to accept, just out. And separately, the thing most prospective movers believe the program does for them is not what it does.

This page covers both, in plain English, with the numbers worked out.

The change most people are missing

Today, the residency history question is narrow. You have to show you were not a Puerto Rico resident during a fixed historical window — January 17, 2006 through January 17, 2012. For almost everyone considering a move now, that is a non-issue.

For applications filed on or after January 1, 2027, a second test is added. You will also have to show that you were not a resident of Puerto Rico for at least six years before the day you move. It is a rolling six years, measured backward from your move date — not from today, and not from the date you file.

Think about who that catches. Someone who tried island life a couple of years ago and moved back. Someone who spent time there for work. Someone who held a decree, let it lapse, and wants back in. None of those people face any obstacle today.

If you have lived in Puerto Rico recently, you are not permanently locked out — but you do have a choice to make this year. You can file on or before December 31, 2026 and skip the six-year test entirely. Or you can wait until six clean years have passed and move then.

Filing this year is what removes the wait. For someone who left the island two years ago, that is the difference between moving now and moving in 2030.

One correction worth making, because it is circulating: some coverage has described this as a reduction from a ten-year requirement to six. There was never a ten-year residency requirement in the Puerto Rico program. The ten-year figure people are thinking of comes from a federal rule that does something else entirely. This is a new requirement, not a relaxed one.

What “apply by December 31” actually means

The good news first: the date that counts is the date your application is filed, not the date your decree is issued. You do not need the decree in hand by year end. A December filing that gets approved in the spring still sits on the pre-2027 terms. The law says so explicitly, and it even includes a provision for applications filed in time but not yet approved.

Now the part that catches people.

An application is only treated as filed when it is complete and the fee has been paid. The regulation is unusually blunt about this: a submission missing required documents or without cleared payment is not considered presented, and no filing date is recognized at all. There is no partial credit for having started.

That matters because a Chapter 2 application is not a form you fill out in an afternoon. It requires, among other things:

A good standing certificate from the Department of State
Tax filing certifications from Hacienda covering the last five years, for you and for every direct and indirect owner of any entity involved
A negative debt certification from Hacienda
A debt certification from CRIM, the municipal revenue authority
A driver’s social security certification from the Department of Labor
A commercial reference
Three years of financial statements — certified by a CPA above a size threshold

Most of those come from government agencies on their own schedule. You cannot compress them by wanting it more. A filing fee of roughly five thousand dollars has to clear as well, and it is not refundable.

There is one more trap after filing. If the office notices something missing, it notifies you and you get ten days to cure it. Miss that window and the case can be archived — and nothing preserves your original filing date if you have to start again.

So the honest version of the urgency is not “file by December 31.” It is that the paperwork behind a December 31 filing needs to be in motion now. Someone starting in mid-December is very unlikely to have a filed application by year end, whatever they are told.

The two tracks, side by side

	Application filed by Dec 31, 2026	Application filed Jan 1, 2027 or later
Rate on qualifying investment income	0%	4%
How long the benefit runs	Through December 31, 2035	Through December 31, 2055
Residency history required	The 2006–2012 test only	That test plus six years of non-residency before you move
What happens when it ends	Reverts to ordinary Puerto Rico rates — there is no automatic step-down to 4%	Reverts to ordinary Puerto Rico rates after 2055
Home purchase	Within two years of receiving the decree, from an unrelated seller	Same, and title must be recorded in the Property Registry

Notice the trade. Filing this year buys a better rate over a shorter window — roughly nine years, and less than that if you take your time moving, because the benefit only starts once you are actually a resident. Waiting costs four points and buys thirty years.

The most common misunderstanding, and it is worth being precise about. People reasonably assume that when the 0% runs out at the end of 2035, the rate simply becomes 4% for the remaining life of the program. It does not.

The law is written as two separate regimes, not one regime with two stages. The 0%-to-2035 rules apply only to applications filed by December 31, 2026. The 4%-to-2055 rules apply only to applications filed from January 1, 2027. There is no bridge between them. Income a pre-2027 filer recognizes after December 31, 2035 falls back to ordinary Puerto Rico income tax rates — not 4%.

There is one way across, and it is not automatic: an existing holder can ask to have their decree modified onto the 4%-to-2055 terms. That is a live right in the statute, but no government guidance, form or fee for it has been published yet. See below.

Which is worth more depends entirely on your own numbers. It cuts both ways, and anyone telling you the December deadline is automatically the better deal has not looked at your situation.

Gains you already have, and gains you make after you move

This is the part almost everyone gets wrong, and it is worth ten minutes of your attention because it often changes the answer.

Moving to Puerto Rico does not make the gain you are already sitting on disappear. A decree is not a wand you wave over your portfolio. It changes how growth is taxed from the day you become a Puerto Rico resident forward. Growth that happened before that day is treated very differently — by Puerto Rico and by the federal government both.

Here is what that looks like with real numbers.

Step	Amount
You bought the stock in 2020 for	$1,000,000
It is worth this much the day you become a Puerto Rico resident in 2026	$3,000,000
You sell it in 2031 for	$4,000,000
Total gain	$3,000,000
Growth before you moved — outside the decree, taxed by Puerto Rico under its ordinary rules	$2,000,000
Growth after you moved — this is the part the decree exempts	$1,000,000

So on a $3,000,000 gain, the decree is doing its work on $1,000,000 of it. The decree is worth what your future growth is worth, not what your portfolio is worth today. Someone with $10 million of built-in gain and modest expected growth gets far less out of this than someone with $2 million and a long runway. Those two people are usually quoted the same headline benefit, and they should not be.

Two things about the federal side that surprise almost everyone.

First, that split is not automatic. Under the federal sourcing rules, if you owned the asset before you moved and were a US taxpayer in any of the prior ten years, the default is that the entire $3,000,000 is US-source — and the Puerto Rico exemption buys you nothing federally. You get the split only by making an election on the return for the year you sell. It is a filing position, not something that happens because you moved.

Second, the way the split is measured depends on what you own. Market value on your first day as a resident is used only for publicly traded securities. For private company stock, LLC and partnership interests, and thinly traded assets, the federal rules split the gain by days held instead — which will not match Puerto Rico’s number. On the facts above, a days-held split gives roughly $1.4 million rather than $1 million.

Federal capital gains tax and the 3.8% net investment income tax apply to whatever ends up US-source. Getting the post-move part treated correctly is work, and it is the work that makes or breaks the economics.

One more figure you will see quoted. There is a Puerto Rico rule taxing pre-move growth at 5% rather than the ordinary rate. It applies only if you sell more than ten years after becoming a resident and before January 1, 2036. If you move in 2026 or later, those two conditions cannot both be true — ten years from 2026 is 2036, already too late. For anyone moving now, that 5% is not available on the pre-2027 track.

On the 2027-and-later track the same rule runs to the end of 2055, and it is reachable. If most of your wealth is unrealized gain that built up before the move, that alone can make waiting the better deal. Worth running your own numbers before assuming December 31 is the deadline that matters to you.

Which track is actually better for you

Three rough profiles. Yours will not match exactly, which is the point — this is a modeling question, not a rule.

Filing by December 31 probably wins

You have lived in Puerto Rico recently and you want to move soon. Filing this year skips the six-year test; waiting means waiting out the clock.

Or: you are moving shortly, and most of your wealth is in assets you have not bought yet or that have not appreciated much. The 0% applies to exactly the growth you are about to have.

Waiting until 2027 may well win

Most of what you own is already deeply appreciated. Four percent across thirty years, with a reachable 5% rate on the built-in gain, can comfortably beat zero percent across nine years with no such rate available.

Or: you cannot realistically move for a few years. The 0% clock does not start when you file — it starts when you become a resident, and it stops at the end of 2035 regardless. File this year and move in 2031 and you have bought about four good years.

Neither, yet

You are not certain you want to live in Puerto Rico. The residency requirement is not a formality and the compliance obligations are ongoing and enforced. A decree you cannot maintain is worse than no decree.

What a decree does not do

Four things worth being blunt about, because they are the source of most disappointment.

It does not bind the IRS. Puerto Rico grants the decree; Puerto Rico can only exempt you from Puerto Rico tax. Federal treatment runs on its own rules, and appreciation that built up before you moved is generally not treated as Puerto Rico income for federal purposes. That is the mechanical reason the worked example above comes out the way it does.

It does not help you for the year you move. The federal exclusion applies only if you are a bona fide resident for the entire tax year. There is a year-of-move rule that can give you the full year even on a mid-year move, but it turns on where your tax home and your personal connections sit over the back half of that year. A December move generally produces nothing federally for that year.

It does not cover real estate — anywhere. The capital gains benefit applies to a defined class: securities and similar instruments, commodities, currencies, and blockchain-based digital assets. Cryptocurrency is expressly in. Real property is in neither definition, so gain on a Puerto Rico property is outside the benefit and so is gain on property you hold on the mainland or abroad. Any page describing this as “0% on all capital gains” is overstating it.

It does not run on autopilot. Holding a Chapter 2 decree is a standing compliance obligation:

An annual report, filed electronically, due November 15 following a calendar year end.
A $5,000 annual fee with it.
An agreed-upon-procedures report prepared by a Puerto Rico–licensed CPA, attached to the annual report. Every decree holder, no size threshold.
At least $10,000 a year to Puerto Rico nonprofits — and the law directs where it goes, not you. $5,000 to a child-poverty organization on a list the legislature publishes annually, $2,500 to a different Puerto Rico nonprofit not on that list, and $2,500 to a government social equality fund. It cannot go to an organization you or your family control. The provision is worded loosely enough that the allocation is worth confirming each year.
A home purchase in Puerto Rico within two years of receiving the decree, from a seller entirely unrelated to you — and a certification in every annual report afterwards that you still hold it.
A compliance certificate that must stay current. If it lapses, the decree is immediately suspended.

If the government flags something missing in your annual report, you have fifteen days to fix it; miss that and the report is treated as never filed. Penalties start at $1,000 per unfiled report and escalate automatically, and the real exposure at the end of that road is revocation, not the fine.

If you already hold a decree

Your decree is honored. The 2026 law says so directly, and it covers decrees issued under the older Act 22 program as well as Act 60 decrees.

But be careful about what “honored” means. It preserves the terms you already have — and those terms end at December 31, 2035. The extension to 2055 does not reach back to you. It belongs only to applications filed from 2027 onward. If you have been told your decree is grandfathered for the life of the program, that is not right; the grandfather is shorter than the program.

And when 2035 arrives, nothing steps in behind it. There is no automatic 4% rate waiting for pre-2027 holders — income recognized after that date is taxed under Puerto Rico’s ordinary rules. Which is what makes the election below matter far more than it first appears.

There is, however, an option that almost nobody is talking about. The 2026 law added a right for existing holders — Act 22 holders included — to request that their decree be modified onto the newer terms: 4% instead of 0%, but running to 2055 instead of 2035.

For a holder with decades of expected growth ahead, trading four points for twenty extra years can be worth a great deal. For someone planning to realize gains within the next few years, it plainly is not.

Note that on the face of the law the newer terms come as a package — you adopt the 4% regime and its longer horizon together. There is no version where you keep the 0% and take the extra twenty years.

Two honest caveats. The law does not state a deadline for making this election, and it does not say whether it can be reversed. And as of today there is no published guidance, form, or fee for it — the right exists in the statute; the plumbing has not been built. Anyone who tells you exactly how to file it is telling you what they expect, not what has been published.

Realistically, can you still make it?

Working backwards from December 31:

By when	What needs to be true
Now	Decide whether the pre-2027 or post-2026 track is actually better for you. This is the modeling step, and doing it after you file is doing it backwards.
Within two weeks	Requests in to Hacienda, CRIM, the Department of State and the Department of Labor for the certifications. These are the long poles.
By late October	Financial statements prepared, ownership chain documented, filing certifications in hand for every direct and indirect owner.
By early December	Application assembled and reviewed, fee ready to pay. Leave slack — if the office asks you to cure an omission you get ten days to respond.
December 31	Complete application accepted and fee cleared. Anything short of that is not a filing, and no filing date is recognized.

Puerto Rico does not publish an average processing time, so nobody can honestly tell you when your decree will issue. There is an expedited track carrying a thirty-day commitment, but it requires a pre-eligibility certificate from a professional enrolled in the government’s certified professional registry.

Frequently asked questions

Is Puerto Rico Act 60 still active?

Yes. Act 60 has not been repealed and the Office of Incentives is still accepting applications. What has changed is the terms rather than the availability. Act 38-2026 lengthens the residency requirement from five years to six and sets the capital gains rate at 4% instead of 0%, and those terms apply to decrees applied for on or after January 1, 2027. A complete application filed by December 31, 2026 is governed by the current rules, including the 0% rate, which runs to December 31, 2035.

Is the December 31, 2026 deadline about when I file or when I move?

When you file. The date that counts is the date a complete application is filed with the Office of Incentives — not the date your decree is issued, and not the date you move. A December filing approved in the spring still sits on the pre-2027 terms. Your move can come later; the law allows you to become a resident well after filing. But be aware that the 0% benefit only starts once you are actually a resident and still ends December 31, 2035, so a long delay between filing and moving quietly shrinks what you get.

What happens if I file in December but I am missing a document?

It is not treated as filed. The Office of Incentives only accepts applications that are complete and have the fee paid; anything else is not considered presented at all. Several of the required certifications come from Puerto Rico government agencies and take weeks. If the office later asks for something you left out and you do not respond within ten days, the case can be archived, and nothing preserves your original filing date if you have to re-file. In practice this means the paperwork behind a December 31 filing has to be underway well before December.

I lived in Puerto Rico a few years ago. Does that matter?

It matters, and it is the clearest reason to act this year — but it is not permanent. For applications filed from January 1, 2027, you must show you were not a Puerto Rico resident for at least six years before the day you move. It is a rolling six years measured backward from your move date, not from today and not from your filing date. So if you have lived on the island recently you have two routes: file on or before December 31, 2026 and skip the test entirely, or wait until six clean years have passed and move then. Filing this year is what removes the wait. Separately and unchanged, you also cannot have been a Puerto Rico resident at any point between January 17, 2006 and January 17, 2012.

Will moving to Puerto Rico eliminate tax on the gains I already have?

No, and this is the most common misunderstanding. A decree changes how growth is taxed from the day you become a resident forward. If you bought at $1 million, the position is worth $3 million the day you become a resident, and you later sell for $4 million, the decree exempts the $1 million of post-move growth. Puerto Rico taxes the $2 million of pre-move growth under its ordinary rules. Federally it is worse than that: the default is that the entire $3 million is US-source income, and you only get the split by making an election on the return for the year you sell. How that split is measured also depends on the asset — market value on your first day is used only for publicly traded securities, while private stock and illiquid holdings are split by days held. The short version is that the decree is worth what your future growth is worth, not what your portfolio is worth today.

What happens after 2035 if I filed under the 0% track?

Your benefit ends and you go back to ordinary Puerto Rico income tax rates. It does not automatically become 4%. The 4%-to-2055 regime is a separate set of rules that applies only to applications filed from January 1, 2027 onward, and there is no bridge between the two. The one route across is to ask that your decree be modified onto the newer terms — a right the 2026 law created, but for which no government form, procedure or fee has been published yet. If you are modeling a long holding period, this is the fact that matters most, and it is the one most commonly gotten wrong.

Is 0% always better than 4%?

No. The 0% track ends December 31, 2035; the 4% track runs to December 31, 2055. If most of your wealth is already appreciated, or you cannot move for several years, four percent across thirty years can comfortably beat zero percent across nine. There is also a Puerto Rico rule taxing pre-move appreciation at 5% that is mathematically unreachable on the pre-2027 track for anyone moving now, but is reachable on the 2027 track. Which side wins is a modeling question specific to your assets and timeline.

Does a Puerto Rico decree change what I owe the IRS?

Only indirectly. Puerto Rico can exempt you from Puerto Rico tax; federal treatment runs on federal rules. Gains that accrued before you moved are generally not treated as Puerto Rico income federally, and claiming the post-move portion requires an election on your return — it is not automatic. The federal exclusion also requires bona fide residence for the entire taxable year. A year-of-move rule can give you the full year on a mid-year move, but it depends on where your tax home and personal connections sit over the second half of that year, so a December move generally gives you nothing federally for that year.

Does the capital gains benefit cover real estate and cryptocurrency?

Cryptocurrency yes, real estate no — and not anywhere. The benefit applies to a defined class of assets: securities and similar instruments, commodities, currencies, and blockchain-based digital assets. Digital assets are expressly included. Real property appears in none of those definitions, so gain on a Puerto Rico property is outside the benefit, and so is gain on property you hold on the mainland or abroad.

I already have a decree. Does anything change for me?

Your decree is honored, including older Act 22 decrees. But what is honored are the terms you already have, and those end December 31, 2035 — the extension to 2055 applies only to applications filed from 2027 onward. Separately, the 2026 law created a right for existing holders to request that their decree be modified onto the newer 4%-to-2055 terms. That can be worth a lot if you have decades of growth ahead. The law does not state a deadline for the election or whether it is reversible, and no implementing guidance has been published yet.

What does it cost to hold a Chapter 2 decree each year?

The recurring obligations are an annual report due November 15 after a calendar year end, a $5,000 annual fee, an agreed-upon-procedures report prepared by a Puerto Rico–licensed CPA attached to that report, at least $10,000 a year in charitable contributions directed by statute across specific recipients, a home purchase in Puerto Rico within two years of receiving the decree from an unrelated seller, and a compliance certificate that must stay current or the decree is suspended. If the government flags an omission in the annual report you have fifteen days to cure it, after which it is treated as never filed. Penalties start at $1,000 per unfiled report and escalate automatically, and the real exposure is revocation.

General information, not advice for your situation. Puerto Rico incentive law changes; confirm the current position before acting. Sources: IRC section 933, section 937, Regulation section 1.937-2, IRS Publication 570 and Ley 60-2019, as amended by Ley 38-2026.