Puerto Rico Governor Ricardo Rosselló Nevares yesterday outlined a broad package of deep tax cuts that he has hoped to get enacted by June 30th.
The reductions will save taxpayers $451 million next year and $849 million a year by 2023.
Individuals would not have an income tax liability if their incomes are under $12,500 vs. $9,000 now, although there would be no taxation of government pensions up to $25,000 vs. $15,000 now.
The tax rate on other individuals with incomes between $12,500 and $21,000 would be .9% instead of seven percent. The rate for incomes from $21,000 to $45,000 would drop from 14% to nine percent. Income from $45,000 to $58,000 would be subject to a 19% rate rather than the current 25%. The top rate bracket would be 31% vs. 33% and apply to incomes over $58,000.
The $2,500 deduction for children would be replaced by a tax credit of between $200 and $600.
There would be a credit for earned income, ranging from $300 to $2000. Tax deductions for mortgages and student loans would be maintained.
The lower corporate income tax rate of 20% would be reduced to 19% and the highest rate of 39% to 31%.
The alternative minimum tax on corporate income would be five percent for income up to $75,000. Income from $75,000 to $425,000 would be subject to an alternative minimum levy of 11% instead of 15-18%. Businesses earning more could pay 12% instead of 19%.
Self-employed individuals and service providers would have an alternative minimum tax of five percent on incomes up to $100,000, rather than 33-39%; 10% on income from $100,000 to $200,000; 15% on income from $200,000 to $500,000; and 20% on income of more than $500,000.
The Sales and Use Tax on prepared food would go down from 11.5% to seven percent.
The tax on business-to-business transactions from four percent to three percent next year and it would be eliminated in 2020.