In the era of remote work, countless nomads have unlocked the freedom that comes with it.
Now, let's ponder a thought. Why reside in an area where your income's significant chunk, say one-third, is gobbled up by taxes?
Surprisingly, there's a way you could shrink your tax bill to nearly nothing. This isn't about moving to Florida or Texas for fewer state taxes... What if I revealed a path to almost zero taxes? And imagine if your new address was a pristine beach…
And guess what? This isn't off-limits for US citizens.
Consider, for example, a freelance professional contemplating establishing a Puerto Rican LLC and opting for the Act 20 exemption. Such a move would result in a fixed income tax rate of just 4%, with federal taxes exempted on income originating in Puerto Rico. You might be wondering, "Can I really endure listening to 'Despacito' on a loop for eternity?" But fret not. That hit song isn't the rage anymore. (And if you're clueless about 'Despacito', count yourself fortunate). If you're open to relocating to Puerto Rico, here are some perks to consider:
Zero tax on interest and dividends post residency
No long-term capital gains tax after you gain resident status
A modest 5% tax on long-term capital gain for appreciation prior to your move for any sales during your initial decade of residency
A low 4% business tax
Sounds intriguing?
Indeed, it's feasible!
However, bear in mind that all good things have an expiry date. In recent years, the IRS has been striving to complicate this process. Therefore, it's another incentive to seize this opportunity right away before it fades away.
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