FEIE vs Puerto Rico Act 60
Compare the Foreign Earned Income Exclusion with Puerto Rico's tax incentives. Find out which strategy could save you the most on your taxes.
Compare Your Tax Savings
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Your Income Profile
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Long-term capital gains from investments
Affects SE tax calculations
Calculates tax comparison between staying in US, using FEIE abroad, or moving to Puerto Rico
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Feature-by-Feature Comparison
Understand the key differences between these two powerful tax strategies.
| Requirement | FEIE | Puerto Rico Act 60 |
|---|---|---|
| Days Required | 330 days outside US in any 12-month period | 183+ days in Puerto Rico per year |
| Residency Test | Physical Presence OR Bona Fide Residence | Bona Fide Resident + Closer Connection Test |
| Income Types Covered | Earned income only (wages, self-employment) | All PR-sourced income (earned, capital gains, dividends) |
| Capital Gains | Not excluded | 0% tax |
| Dividends & Interest | Not excluded | 0% tax |
| Self-Employment Tax | Full 15.3% | Reduced via structure |
| Location Flexibility | Anywhere (not US) | Must live in PR |
| Complexity | Moderate | High (requires relocating to PR) |
Which Strategy is Right for You?
Choose FEIE If...
- Digital nomads
- Expats with earned income under $130k
- Those who want location flexibility
- Your income is primarily wages/salary
- You don't want to commit to one location
Choose Puerto Rico If...
- High income earners
- Investors with significant capital gains
- Entrepreneurs who can relocate
- You have significant investment gains
- You can commit to living in Puerto Rico
Learn More
Deep-dive into each strategy with our comprehensive guides
Frequently Asked Questions
What is the difference between FEIE and Puerto Rico Act 60?
FEIE excludes up to $130,000 of earned income for US citizens living abroad for 330+ days. Puerto Rico Act 60 offers 0% tax on capital gains and 4% corporate tax for qualifying businesses, but requires relocating to Puerto Rico for 183+ days per year.
Which is better: FEIE or Puerto Rico for tax savings?
It depends on your income type. FEIE is better for those with primarily earned income under $130k who want location flexibility. Puerto Rico is better for high earners, investors with significant capital gains, or entrepreneurs who can relocate and benefit from 0% capital gains rates.
Can I use both FEIE and Puerto Rico tax benefits?
No, you cannot use both simultaneously. FEIE requires living outside the US (including PR), while Puerto Rico Act 60 requires you to be a bona fide resident of Puerto Rico. You must choose one strategy based on your circumstances.
What are the Puerto Rico Act 60 residency requirements?
To qualify for Act 60, you must: 1) Spend 183+ days per year in Puerto Rico, 2) Have your primary home in PR, 3) Pass the 'closer connection' test showing PR is your tax home, 4) Have no significant connections to other US states.